Vic, who was experiencing financial difficulties, was able to adjust his debts as follows. Determine the Federal income tax consequences to Vic.
a. Vic is an attorney. Vic owed his uncle $25,000. The uncle told Vic that if he serves as the executor of the uncle's estate, Vic's debt will be canceled in the uncle's will.
b. Vic borrowed $80,000 from First Bank. The debt was secured by land that Vic purchased for $100,000. Vic was unable to pay, and the bank foreclosed when the liability was $80,000, which was also the fair market value of the property.
c. The Land Company, which had sold land to Vic for $80,000, reduced the mortgage on the land by $12,000.