Jimmy has fallen on hard times recently. Last year he borrowed $278,000 and added an additional $54,500 of his own funds to purchase $332,500 of undeveloped real estate. This year the value of the real estate dropped dramatically, and Jimmy's lender agreed to reduce the loan amount to $250,900.

For each of the following independent situations, indicate the amount Jimmy must include in gross income:

Note: Leave no answer blank. Enter zero if applicable.

Required:

A. The real estate is worth $190,600 and Jimmy has no other assets or liabilities.

B. The real estate is worth $257,800 and Jimmy has no other assets or liabilities.

C. The real estate is worth $218,500 and Jimmy has $51,900 in other assets but no other liabilities.

Question B

The real estate is worth $257,800 and Jimmy has no other assets or liabilities.

	Scenario B
Amount Included in Gross Income

Please explain!

Thank you