Virginia, who was experiencing financial difficulties, was able to adjust her debts as follows. Determine the tax consequences to Virginia. a. Virginia’s father Vito agreed to cancel a $25,000 debt.

Virginia, who was experiencing financial difficulties, was able to adjust her debts as follows. Determine the tax consequences to Virginia.

a. Virginia’s father Vito agreed to cancel a $25,000 debt. Virginia told him “I am not going to treat you any better than I treat your brothers and sisters; therefore, the $25,000 is coming out of your inheritance from me.”

b. The Land Company, which had sold land to Virginia for $80,000, reduced the mortgage on the land by $12,000

c. The Subprime Bank reduced the principal of the mortgage on Virginia’s principal residence by $9,000

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