outstanding principal amount. Margaret defaulted on her recourse mortgage. With the lender's agreement, she sold the property in a short sale. Mark for follow up Question 8 of 40. Which taxpayer is most likely to have taxable income from cancellation of debt, assuming no exclusions apply? O Valarie. She defaulted on a nonrecourse loan. At the time of foreclosure, the outstanding debt was $165,000 and fair market value of the property was $170,000. O Alexander. He defaulted on a nonrecourse loan. At the time of foreclosure, the outstanding debt was $279,000 and fair market value of the property was $258,000. O Claude. He defaulted on a recourse loan. At the time of foreclosure, the outstanding debt was $85,000 and the fair market value of the property was $75,000. O Eliza. She defaulted on a recourse loan. At the time of foreclosure, the outstanding debt was $105,000 and fair market value of the property was $115,000. Mark for follow up