What are the tax implications if assets are used to repay a debt instead of an actual cash payment?
An example below:
A loan is provided by party A of $10,000 with 20% interest to party B.
Party B cannot repay and so they hand over a car valued at $12,000 to party A and the agreement is extinguished. No cash has changed hands.
Does party A have to put their hand in their pocket and pay tax after receiving the car?