We have met both conditions for 90-16 to apply. 1. Recourse debt 2. the bank releases A from recourse debt without buttfocking them (financially) (lender forgives remaining loan balance). Because 90-16 applies we now have two transactions. Property transaction and discharge of indebtedness. TP has 75 gain on prop transaction: AR 100 (fmv) - AB 25 = Gain 75 Discharge of indebtedness: Liab 500 - FMV100 --> S61/108 analysis. If nonrecourse then Tufts and one transaction. AR 500 - AB (25) = Gain of 475.