(TCO B) In return for $1,000, Bobby cancels Sam's debt of $5,000. The cancellation is...
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(TCO B) In return for $1,000, Bobby cancels Sam's debt of $5,000. The cancellation is not a gift, and Sam is neither insolvent nor bankrupt. Which of the following statements is correct? Bobby has $1,000 taxable income. Sam has $4,000 of taxable income. Sam has $5,000 of taxable income. Neither Bobby nor Sam has any taxable income from this transaction.
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