The debt would have been deductible by the axpay O Debt was canceled from the mo

Question

The debt would have been deductible by the axpay O Debt was canceled from the mortgage on a taxpayer's second home. Mark for follow up Question 62 of 75. Which of the following statements is correct regarding tax attributes? O Generally, the amount of canceled debt must be used to reduce tax atributes in a particular order property before reducing other tax attributes. Except for credit carryovers, reduce the tax attributes $1 for each dollar of canceled debt that is excluded from income. O Both statements 1 and 2 are true as they relate to tax attributes. Mark for follow up Question 63 of 75 Choose the correct answer to complete the following statement: Canceled debt is O Included in gross income when the debt is discharged in a Title 11 bankruptcy case. O Included in gross income if the debt is discharged when the taxpayer is insolvent. Not included in gross income when the debt is canceled as a gift Included in gross income when the debt is discharged as an inheritance.

Explanation / Answer

62)

63)

d) both statements 1 and 2 are true as they relate to tax attributes If a debtor excludes canceled debt from income because it is canceled in a bankruptcy case or during insolvency he or she must use the excluded amount to reduce certain tax attributes.

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