In Return for $1,000, Mr

In return for $1,000, Mr. Hand cancels Mr. Sandwich's debt of $4,000. fte cancellation is not a gift and Mr. Sandwich is neither insolvent nor bankrupt. Which of the following statements is correct?

A) Mr. Hand has $1,000 taxable income.
B) Mr. Sandwich has $3,000 of taxable income.
C) Mr. Sandwich has $4,000 of taxable income.
D) Neither Mr. Hand nor Mr. Sandwich has any taxable income from this transaction.