Isabella Bank loaned Jim Alwood $150,000 for his gardening supplies company.

As a result of a drought, the year was a disaster for Alwood. Since he was unable to repay the loan, Isabella Bank accepts the following plan to extinguish the debt:

Jim Alwood is to pay cash of $3,000, transfer ownership of the gardening property with a value of $80,000 and a basis of $60,000, and also to transfer to the bank stock with a value of $30,000 and a basis of $45,000. Locate and read the following partial listing of tax authorities to determine how much gross income Alwood should report from the extinguishment of his bank debt:

Reg, Sec. 1.61-12.;

Sec. 108;

James J. Gehl, 102 T.C. 74 (1994);

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