A worker who borrowed from his employer has cancellation-of-debt income. A few years after his employer loaned his $79,000, the worker lost his job and the business was sold. The successor company gave him a Form 1099-MISC reporting the borrowings as compensation, but the Tax Court said that was erroneous. It decided instead that the successor company forgave the debt and cancelled the loan. This distinction is important because the debtor was insolvent prior to the discharge by $23,000, so he’s taxed only on $56,000 of the income (McAllister, TC Memo. 2013-111).