Before any debt cancellation, PeppersCo holds business land with a $2,400,000 fair market value, a $1,000,000 tax basis, and a 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 $___________ of the debt cancellation and ____________(increases/decreases) its basis in the land basis by $__________.

b. The mortgage is seller financing, and Peppers is solvent. The debt cancellation ______________(is included in/has no effect on) gross income and Peppers' basis in the land _____________ (is decreased/is increased/does not change).

c. Peppers has filed for bankruptcy and the debt is discharged by that action. The discharge of debt is ______________(included in/excluded from) gross income and the basis in the land is __________ (decreased/increased) by $____________.