Tony borrows $10,000 from Second Union bank on 12/31/19. Throughout 2019 and 2020, Tony makes the required principal and interest payments on this loan. Beginning in January 2021, Tony begins to experience financial difficulties. Due to these difficulties he fails to make any payments to the bank during 2021. The bank agrees to reduce Tony’s debt to $3,000 and Tony pays the $3,000 in full satisfaction of the remaining $5,000 debt. How much discharge of indebtedness income must Tony include in his 2021 tax return?

		$2000
		$0
		$5000
		$3000

Answer rating: 100% (QA)

Section 61 of the Internal Revenue Code establishes that all income fro... View the full answer