Federal taxation.

These are following facts I find out about the case:

- She is insolvent because her liabilities are higher than her assets.

- S 108 talks about no loss or gain- when you trade or give your investment; it has to be either gain or loss.

- I think she has to use capital loss.

ACCTG 310 Fall, 2016 Minor Case 1 Due September 16, 2016 by 2:45pm Maxine owes PSU Bank $200,000. During the current year, she is unable to make the required payments on the loan and negotiates the following terms to extinguish the debt. Maxine transfers to PSU Bank ownership of an investment property with a value of $90,000 and basis of $55,000 (gain=$35,000), and common stock with value of $50,000 and basis of $70,000 (loss=$20,000). Maxine also pays PSU Bank $5,000 cash, and PSU Bank forgives the remaining amount of debt. Before the agreement, Maxine's assets totaled $290,000 and her liabilities totaled $440,000. Read and analyze the following authorities. Determine how much gross income Maxine has from the extinguishment of the debt. IRC 108 Reg 1.61-12 Reg 1.1001-2 Julian S. Danenberg, 73 T.C. 370 (1979) James J. Gehl, 50 F. 3d 12 (8th Cir., 1995) affg. 102 T.C. 784 (1994) Write a memo to the file summarizing your findings. A memo to the file should include enough information so, if you were hit by a bus after writing it, someone else in your firm could step in and handle the issue without having to reconstruct your work. You should include this information in the following format: FACTS: You need to briefly restate the facts, to make sure the situation you researched is the same as the situation your client asked about. ISSUES: State the specific question(s) to be researched. CONCLUSIONS: Answer the tax questions you identified. AUTHORITY AND REASONING: Be sure to give complete citations for your authorities. Tie the facts of the situation into your case and conclusions. Provide a detailed, logical analysis to support each conclusion