QUESTION 7 Jimmy has fallen on hard times recently. Last year he borrowed $250,000 and added an additional $50,000 of his own funds to purchase $300,000 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 $230,000. The real estate is worth $200,000 and Jimmy has $46,000 in other assets but no other liabilities. What is the amount Jimmy must include in gross income? QUESTION 8 Fred currently eams $9,000 per month. Fred has been offered the chance to transfer for three to five years to an overseas affiliate. His employer is willing to pay Fred $10,500 per month if he accepts the assignment. Assume that the maximum foreign eamed income exclusion for next year is $108,700. How much U.S. gross income will Fred report if he accepts the assignment abroad on January 1 of next year and works overseas for the entire year?