Harold bought land from jewel for $150,000. harold paid $50,000 cash and gave jewel an 8% note for $100,000. the note was to be paid over a five-year period. when the balance on the note was $80,000, jewel began having financial difficulties. to accelerate her cash inflows, jewel agreed to accept $60,000 cash from harold in final payment of the note principal. a. harold must recognize $20,000 ($80,000 - $60,000) of gross income.
b. harold is not required to recognize gross income, but must reduce his cost basis in the land to $130,000.
c. harold is not required to recognize gross income, since he paid the debt before it was due.
d. jewel must recognize gross income of $20,000 ($80,000 - $60,000) from discharge of the debt.
e. none of these.