Self-Study Problem 2.18

In 2020, Stuart loses his job when his employer closes due to the COVID-19 pandemic. Because Stuart is struggling to pay his monthly expenses, he arranges a decrease in his mortgage from $160,000 to $120,000 with his mortgage lender. His basis in the home is $200,000 and the fair market value at the time of the mortgage reduction is $250,000.

1. What amount of the cancellation of debt must Stuart include in his income in 2020? $fill in the blank 1

2. What is Stuarts basis in his home after applying exclusion provisions (if any)?