Ella's main home was foreclosed in 2021. Ella received forms 1099-C reporting the following amounts of canceled debt.

$10,000 in acquisition debt

$5,000 of a home equity loan. Ella used the funds from this loan to purchase a new car

how much of this cancellation of debt is excludable from Ella's2021 income under the qualified principal residence exclusion

1. $0. the qualified principal residence exclusion does not apply to debt canceled in 2021.

2. $5,000

3. $10,000

4. $15,000