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Amy owes the bank $500,000, and is currently having some cash flow problems. Therefore, in full satisfaction of debt, she gives the bank land with
Amy owes the bank $500,000, and is currently having some cash flow problems. Therefore, in full satisfaction of debt, she gives the bank land with a FMV of $415,000 (Basis of $245,000). What is the amount and character of income that Amy must recognize as a result of this transaction?
Can someone please explain their answer to this? I am stuck on the "character of income" part!
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