William purchased his personal residence in 2007 for $285,000.In 2012,he lost his job and has been unable to make payments on the mortgage since July of 2012.In 2013,William works out a new repayment schedule with his bank after he obtained a new job that reduces his mortgage from $235,000 to $120,000.Which of the following statements is true regarding this mortgage reduction?
A) William will be required to include the debt in income because he is continues to own the home.
B) William will have to include any forgiveness of debt income only if he sells the house for more than $285,000.
C) The basis of the home for any future sale is $120,000.
D) The basis of the home on any future sale is $150,000..
Correct Answer:
Verified
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