John, a cash basis taxpayer, had a $5,000 loan from his local credit union. He lost his job and was unable to make the payments on this loan. fte credit union determined that the legal fees to collect might be higher than the amount John owed so they canceled the $3,000 remaining amount due on the loan. John did not ﬁle bankruptcy nor was he insolvent. How much must John include in his income as a result of this occurrence?
a. $5,000
b. $3,000
c. $0
d. $8,000

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The Answer of John, a cash basis taxpayer, had a $5,000 loan from his local credit union. He lost his job and was unable to make the payments on this loan. fte credit union determined that the legal fees to collect might be higher than the amount John owed so they canceled the $3,000 remaining amount due on the loan. John did not ﬁle bankruptcy nor was he insolvent. How much must John include in his income as a result of this occurrence?
a. $5,000
b. $3,000
c. $0
d. $8,000

John, a Cash Basis Taxpayer, Had a $5,000 Loan from His