Lawan has been making payments on her federal student loan on an income-based repayment plan for the last 22 years. Under the terms of her plan, the remaining balance will be forgiven after another three years of payments, in 2025, Under law applicable for Tax Years 2020 through 2025, how will her loan forgiveness be treated on her federal return? 00 The full amount of the forgiven balance will be taxable income. The amount of the forgiven balance in excess of $20.000 (indexed for inflation) will be taxable income. The forgiven balance can be excluded from taxable income. A percentage of the forgiven balance will be taxable income using a formula that will be based on Lawan's income in the year the balance is forgiven.
Lawan has been making payments on her federal student loan on an income-based repayment plan for the last 22 years. Under the terms of her plan, the remaining balance will be forgiven after another three years of payments, in 2025, Under law applicable for Tax Years 2020 through 2025, how will her loan forgiveness be treated on her federal return? 00 The full amount of the forgiven balance will be taxable income. The amount of the forgiven balance in excess of $20.000 (indexed for inflation) will be taxable income. The forgiven balance can be excluded from taxable income. A percentage of the forgiven balance will be taxable income using a formula that will be based on Lawan's income in the year the balance is forgiven.
Chapter4: Gross Income: Concepts And Inclusions
Section: Chapter Questions
Problem 21CE: On January 1, 2019, Kunto, a cash basis taxpayer, pays 46,228 for a 24-month certificate. The...
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Transcribed Image Text:Lawan has been making payments on her federal student loan on an income-based repayment plan for the last 22 years. Under the terms of her plan, the remaining
balance will be forgiven after another three years of payments, in 2025, Under law applicable for Tax Years 2020 through 2025, how will her loan forgiveness be treated
on her federal return?
00
The full amount of the forgiven balance will be taxable income.
The amount of the forgiven balance in excess of $20.000 (indexed for inflation) will be taxable income.
The forgiven balance can be excluded from taxable income.
A percentage of the forgiven balance will be taxable income using a formula that will be based on Lawan's income in the year the balance is forgiven.
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