Debt Discharge Allocation Issues in Flow-Through Entities

• Published in: Executive's Tax & Management Report Vol. 73; no. 1; p. 6
• Main Author: Hamill, James R
• Format: Trade Publication Article
• Language: English
• Published: Riverwoods CCH INCORPORATED 01.01.2010
• Subjects: C corporations; Capital losses; Debt cancellation; Deferred income; Insolvency; Internal Revenue Code; Liability; Pass through entities; Passive activity; Section 108; Section 61; Stockholders; Tax allocation; Taxable income; Taxpayers; United States > US

Many taxpayers have realized cancellation of indebtedness (COD) income during the current recession. Section 61 defines gross income to include income from cancellation of indebtedness Section 108 generally offers six provisions that could result in an exclusion of COD income: 1. The taxpayer is ins...