Bob and Linda purchased their vacation home in 2014 for $400,000.They financed the purchase with a $350,000 mortgage.In 2017,they fall upon hard times and cannot make the mortgage payments,and their mortgage is foreclosed.The mortgage company sells the house for $300,000.At the time of the sale,the mortgage balance is $325,000.The mortgage company cancels the remaining debt on the mortgage.How much income do Bob and Linda have from the cancellation of the remaining debt on their home?

Question

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Bob and Linda have $25,000 of income from the cancellation of the remaining debt. The mortgage balance was $325,000, and the house was sold for $300,000, leaving a $25,000 difference that was canceled.

Bob and Linda Purchased Their Vacation Home in 2014 for $400,000.They