There is gross income. JD has 15k of indebtedness income. When JD received 20k of forgiveness and that was not enough to get past 50k of liabilities remaining. There is an exclusion under S108 because JD is insolvent. No because S108 will apply and exclude the debt discharge. In order for 108 to apply, JD has to be insolent at least to the extent of the discharge (15k). JD is 50k insolvent so it will apply