1.1.18. Optimistic borrowed $20,000 to buy a machine for his printing business. Shortly thereafter, the economy went into a deep recession, and Optimistic was not able to repay the debt, although he was not insolvent. In the current year, the creditor reduced the debt by $10,000 so Optimistic could afford to pay it. The creditor was not the seller of the machine. As a sult of this reduction of debt, The purchase price of the machine is adjusted to reduce Optimistic's basis in the machine. Optimistic has $10,000 of income. A. B. C. The debt is a qualified business indebtedness and the basis of the machine must be reduced. D. Any tax effect from the reduction of the debt is deferred until final payment by Optimistic. 1.1.19. Shifty borrowed $10,000 from Easy. When Easy tried to collect the debt, she discovered that Shifty had moved to another state. Easy tracked Shifty down and demanded payment. Knowing it would cost Easy a substantial amount of time and money to collect the debt, Shifty offered to pay $5,000 on the condition that Easy cancel the remainder of the debt. Easy agreed to accept the $5,000 and cancel the remaining $5,000 of the debt. Which of the owing statements is true? A. Shifty has $5,000 of income when Easy B. Easy has $5,000 of income upon collection of C. Shifty had $10,000 of income upon obtaining D. Neither Shifty nor Easy has any income from cancels the debt. half of the debt. the loan. this transaction