With remote work models prevailing and many tenants gravitating to Class A buildings with amenities, there are more than a few Class B and Class C property owners with high vacancy rates and significant imminent capital seriously considering giving the keys to their lenders in exchange for relieving the debt obligation. 

However, even for properties with a dismal financial outlook, borrowers must consider the potential negative tax consequences of phantom gain and cancellation of debt.

Phantom Gain

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