Question 16 of 78. Debt canceled in a personal bankruptcy is taxable as cancellation of debt income to what extent All canceled debt, except for that related to real property is taxable as cancellation of debt income. Debt canceled in a bankruptcy proceeding under federal law is not taxable as cancellation of debt income Only secured debt in excess of the fair market value of the collabol is taxable as income Unsecured debt that is canceled in bankruptcy is taxable as income Mark for follow up Question 17 of 75. No taxable income is recognized from cancellation of debt when the O Canceled debt was recourse debt O Canceled debt was for the taxpayor's second homo, Cancellation of debt was intended as a gift Taxpayer was solvent prior to the cancellation of debt. Mark for follow up Question 18 of 75. Taxpayers must generally include income from the cancellation of debt in their total income, unless they quality for an exception or exclusion. Exclusions must be applied in the following order: Bankruptcy, insolvency, qualified farm indebtedness, qualified real property business debt, qualified principal residence indebtedness. Bankruptcy, qualified real property business debt, qualified principal residence indebtedness, insolvency, qualified farm indebtedness Insolvency, qualified principal residence indebtedness, bankruptcy, qualified farm indebtedness, qualified real property business debt. Qualified farm indebtedness, bankruptcy, Insolvency, qualified principal residence indebtedness, qualified real property business dett. Mark for follow up