McGraw-Hill's Taxation of Individuals 3rd Edition by Brian Spilker,Benjamin Ayers,John Robinson,Edmund Outslay ,Ronald Worsham,John Barrick,Connie Weaver

Exercise 61

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.For each of the following independent situations, indicate the amount Jimmy must include in gross income and explain your answer:
a.The real estate is worth $175,000 and Jimmy has no other assets or liabilities.
b.The real estate is worth $235,000 and Jimmy has no other assets or liabilities.
c.The real estate is worth $200,000 and Jimmy has $45,000 in other assets but no other liabilities.