Final answer:
Generally, the discharge of indebtedness is included in gross income, as it represents a financial benefit to the debtor, but there are exceptions.
Step-by-step explanation:
True, generally speaking, the discharge from indebtedness is included in gross income. When a debt is forgiven or discharged for less than the full amount owed, the amount of the forgiven debt is generally treated as income because it represents financial benefit to the debtor. To illustrate, imagine someone owes $10,000 and the lender forgives $5,000. The debtor would typically be required to include that $5,000 in their gross income for tax purposes. However, there are exceptions to this rule, such as insolvency or certain qualified student loan forgiveness programs where the forgiven amount might not be taxable. These principles are part of the U.S. tax code and are important for understanding individual and business tax liabilities.