Discharges of Debt Are Generally Taxable

question 107

Multiple Choice

Discharges of debt are generally taxable. However, in certain circumstances, part or all of the income from a discharge of indebtedness may be excluded. Which of the following concepts form(s) the basis for the income tax treatment of a discharged debt?
I.Wherewithal-to-Pay Concept.
II.Legislative Grace Concept.
III.Realization Concept.
IV.Substance Over Form Doctrine.
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• A)Statements I and III are correct.
• B)Statements II and III are correct.
• C)Statements I and IV are correct.
• D)Statements I, II, and III are correct.
• E)Statements II, III, and IV are correct.

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