Before any debt cancellation, PeppersCo holds business land with a $2,400,000 fair market value, a $1,000,000 tax basis, and related mortgage of $3,000,000. The lender reduces the mortgage principal by $600,000. Assume Peppers is insolvent and that the land and mortgage are its only asset and liability. What are the Federal income tax consequences of the debt cancellation given the following independent scenarios? If an amount is zero, enter "0". a. Peppers is insolvent, and the land and related mortgage are the only asset and debt, respectively. As a result, PeppersCo excludes X of the debt cancellation and decreases by b. The mortgage is seller financing, and Peppers is solvent. The debt cancellation has no effect on its basis in the land ba gross income and Peppers' basis in the land does not change by $ c. Peppers has filed for bankruptcy and the debt is discharged by that action. The discharge of debt is excluded from gross income and the basis in the land is decreased Feedback