Problem 5-56 (LO. 2) Vic, who was experiencing financial difficulties, was able to adjust his debts as follows: a. Vic is an attorney. Vic owed his uncle $25,000. The uncle told Vic that if he serves as the executor of the uncle's estate, Vic's debt will be canceled in the uncle's will. The $25,000 debt cancellation is included in Vic's gross income when the uncle dies. b. Vic borrowed $80,000 from First Bank. The debt was secured by land that Vic purchased for $100,000. Vic was unable to pay, and the bank foreclosed when the liability was $80,000, which was also the fair market value of the property. Vic has a 20,000 loss as a result of the foreclosure. C. The Land Company, which had sold land to Vic for $80,000, reduced the mortgage on the land by $12,000. The $12,000 reduction in the debt is excluded from Vic's gross income and Vic must increase his basis in the property