Which statement is true regarding loans in relation to income tax?

The statement regarding loan discharge or forgiveness constituting income is accurate because when a loan is discharged or forgiven, the borrower may indeed have to recognize the forgiven amount as income for tax purposes. The IRS considers this as a form of economic benefit, hence it may be subject to income tax. For instance, if a lender forgives a portion of a loan, the amount forgiven typically adds to the borrower's taxable income for that year, unless specific exceptions apply, such as bankruptcy or insolvency.

Loans in themselves are not taxable as income when received, which clarifies why other options may not hold. Generally, the principal amount of a loan is money that the borrower is obligated to repay; therefore, it isn't considered income. Additionally, while interest on loans is usually a deductible expense for the borrower, it is not classified as non-taxable income to the lender, which distinguishes it from the overall classification of loans or loan forgiveness in relation to income around tax regulations.