Problem
In 2021, Nithya lost her job when her employer had to close as a result of losses because of damages to many of its properties from demonstrators. Because Nithya is struggling to pay her monthly expenses, she arranges a decrease in her mortgage from $180,000 to $120,000 with her mortgage lender. Her basis in the home is $220,000, and the fair market value at the time of the mortgage reduction is $280,000. What amount of the cancellation of debt must Nithya include in her income in 2021?