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24 May, 06:53

Marvin received Form 1099-C reporting canceled credit debt of $7,000. His total liabilities immediately before the cancellation were $43,000. The FMV of assets immediately before the cancellation were $38,000. What amount of canceled debt will Marvin report on his return? a. $0b. $2,000 c. $5,000

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  1. 24 May, 07:09
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    b. $2,000

    Explanation:

    Marvin liability immediately before the cancellation=$43,000

    Marvin FMV of assets immediately before the cancellation=$38,000

    Difference between two liability and assets=43,000-38,000

    =$5,000

    Form 1099-C canceled credit debit=$7,000

    Amount of canceled debt that marvin will report=7,000-5,000

    =$2,000

    So the answer shall be b. $2,000
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