Question: Please answer with reason for all why the option is correct and why the other options are incorrect Please answer correct otherwise skip it Lloyd

Please answer with reason for all why the option is correct and why the other options are incorrect Please answer correct otherwise skip it

Lloyd and Melissa have a nonrecourse loan and default on the mortgage secured by their principal residence. After unsuccessful attempts to sell the home, they decide to give a deed in lieu of foreclosure to the lender. How do they report this on their income tax return?

They must file a bad debt loss on their return.

They must file Form 8949 and Schedule D.

Form 4797 must be filled out.

Nothing is reported since they voluntarily gave their home back to the lender

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