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Why is cancelled recourse debt treated as income? 1) Because the taxpayer received the benefit...

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Accounting

Why is cancelled recourse debt treated as income?

1) Because the taxpayer received the benefit of the use of the money but did not carry the burden of repayment.

2) Because a deduction is allowed if the debt is related to the taxpayer's primary residence.

3) Because recourse debt is subject to discharge in bankruptcy. (This answer is incorrect. It was marked wrong on my quiz.)

4) Because recourse debt is not subject to discharge in bankruptcy.

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