Theresa Piels (TP) is a Silicon Valley venture capital investor and your client.

TP was an equity investor in SynLyth, a start-up company developing manufactured lithium for use in large batteries. Unfortunately, SynLyth was never able to perfect its technology. As a result, the company closed its business and liquidated in February of 2021. Consequently, SynLyth's equity investors lost their entire investment. TPs basis in SynLyths equity (Common Stock) was $1 million. TP had purchased the entire investment in 2017. TP had leveraged the $1 million investment. TP financed one-half of the investment ($500,000) through a loan from Risk-Lender LLC (RLL). TPs SynLyth Common Stock secured RLL's loan to TP. The loan principal was due the earlier of 2025, or several events, including SynLyth, ceasing business. With SynLyth's anticipated liquidation, TP began negotiating a debt settlement with RLL. In May 2021, TP and RLL reached an agreement. Under the agreement, RLL accepted ten (10) Bitcoin (BTC) and released TP from any obligation to repay the loan. This loan cancellation closed during May 2021, when BTC was trading at US$35,750 per BTC. TP had received the 10 Bitcoin in March of 2015 as payment for services rendered to an early Blockchain start-up. The agreed-upon price for the services was $2500. In March 2015, Bitcoin was trading at $250 per Bitcoin. On TPs 2015 Income tax return, TP reported the 10 Bitcoin at $2500 as compensation for services. TPs 2021 gross income includes $1,282,000 in long-term capital gains and $675,750 of net income from TPs consulting business. TP is solvent (assets exceed liabilities) before and after the loan forgiveness. Assignment: TP has asked for an explanation of the Federal Income Tax consequences to TP of SynLyths liquidation and the cancellation of the RLL debt obligation. In a properly structured tax research memorandum, document your answer.

Identify the appropriate key issues and any implied issue