1. Which of the following conditions are true in the case of income from discharge of indebtedness?

I. If the debt is reduced by a bank because of collection issues, no income is recognized to the debtor.

II. If the debtor is a business, the discharge usually is considered a gift.

III. If a corporation's debt is forgiven by a shareholder in the corporation, the corporation increases paid-in capital and is not required to recognize income.

A. I, II, and III

B. I and II

C. III

D. II and III