Since enactment of the Agricultural Credit Act of 1987,1 in which Congress instructed the then Farmers Home Administration (now Farm Service Agency) and Farm Credit Services to avoid losses on loans with priority consideration to writing down the loan principal and interest and setting aside debt whenever those procedures would make it possible for a borrower to survive and remain on the farm or ranch, the question has been raised whether the write-down of loan balances produced discharge of indebtedness income.



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