In Return for $1,000, Mr

question 65

Multiple Choice

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.

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