Deborah, who is single, is having financial trouble and stopped paying her VISA credit card. After several months the credit company worked out a payment plan with her. She has a $10,000 balance and is required to pay $100 a month for five years. The total payments amount to a flat $6,000 with no interest or finance charges. Deborah does not have to report income for the $4,000 that she does not have to repay.

True False

Barney and Betty, married filing jointly, sold their home for $750,000 and purchased it for $200,000. They have lived in the home for the last 20 years. How much of the gain is included in their gross income?

A. $250,000

B. $300,000

C. $50,000

D. None of the above.

E. $550,000