Blinder Corporation Was Having Some Cash Flow Problems

question 19

Multiple Choice

Blinder Corporation was having some cash flow problems.One of its creditors agreed to accept $25,000 in payment of a $40,000 debt to help the company out of the jam, even though it is not bankrupt.How does Blinder treat this debt repayment?

• A)Blinder has neither income nor loss
• B)Blinder must recognize $15,000 of income
• C)Blinder must reduce the basis of assets by $15,000
• D)Blinder must reduce tax attributes by $15,000

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Definitions:

Disulfiram

A medication primarily used to support the treatment of chronic alcoholism by producing an acute sensitivity to ethanol, deterring individuals from alcohol consumption.

Bromocriptine

A medication primarily used to treat disorders like Parkinson's disease, prolactinomas, and acromegaly by mimicking the action of dopamine in the brain.

Sobriety

The condition of not having any measurable levels or effects from alcohol or drugs.

Substance Abuse

The harmful use of substances, including alcohol and drugs, leading to addiction or other negative outcomes.