Question

The lender of Lawans student loan canceled her balance due of $33,981 in 2019 which of the following disallow Lawan (29)

from excluding the cancel date on her return

a) the lender is not a qualified lender

b) she died

c) she became disabled

d) she agrees to teach for 5 yrs in a school that serves low-income

Answer 1

Answer:

Correct answer is:

a) the lender is not a qualified lender

Explanation:

The exceptions to Cancellation of Debt Income includes:

• Amount of loan being discharged on account of disability or death
• Amount of student loan canceled under loan provisions enabling cancellation of debt if the student agrees to work for certain period of time in certain professions.

As such options b, c and d will allow exclusion of the cancelled debt on her return.

But option a is not an exceptions to cancellation of Debt Income.

As such option a will disallow Lawan from excluding the cancelled debt on her return.