Jimmy has fallen on hard times recently. Last year he borrowed $265,000 and added an additional $86,000 of his own funds to purchase $351,000 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 $238,300.
For each of the following independent situations, indicate the amount Jimmy must include in gross income
a. The real estate is worth $178,000 and Jimmy has no other assets or liabilities.
b. The real estate is worth $245,700 and Jimmy has no other assets or liabilities.
c.The real estate is worth $200,200 and Jimmy has $48,300 in other assets but no other liabilities.
