g Refer to the facts in part (c) of the preceding problem. In 2021, BLS repaid its $8,000 debt to Leo before he restored any basis in the debt. How much gain or loss, if any, will Leo recognize as a result of the debt repayment

$8000 gain

Explanation:

In this scenario, Leo would be recognizing and registering an $8000 gain as a result of the debt repayment. This is because the individual on the receiving end of a debt repayment is receiving money that they did not have before the repayment took place and are therefore gaining that amount. Even though the money was originally theirs and was lent out, since they did not have the money right before receiving the repayment it would be considered a gain.

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