What is the potential cancellation of debt income when recou

What is the potential cancellation of debt income when recourse debt of $70,000 on property with a fair market value of $58,000 is cancelled?

a) $12,000

b) $58,000

c) $70,000

d) $128,000

Solution

So the correct answer is A.

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CODI = Debt - FMV of property

          = 70000 – 58000

          = 12000

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Hope that helps.

Feel free to comment if you need further assistance J