Cancellation of Indebtedness Income (Completed)

Debtors with cash flow issues who may be unable to pay their debts without accommodations from their lenders face numerous tax issues, and sometimes tax surprises, in the context of debt workouts and bankruptcy. Matters become more complicated in the context of LLC's, S-corporations and other passthrough entities.This course addresses the creation and exclusion of cancellation of indebtedness income, consequences of debt workouts on LLC members, and tax attribute reduction.

Who Should Attend
Tax practitioners at all levels who provide advice and return preparation on debt modifications, debt workouts, and bankruptcies.

Topics Covered

• Cancellation of indebtedness income
• Exclusion of cancellation indebtedness income under section 108
• Debt modification rules
• Difference in treatment from foreclosures on non-recourse debt secured by property

Learning Objectives

• Explain the difference in tax treatment between cancellation of recourse debt and foreclosures of property securing non-recourse debt
• Identify situations when cancellation of indebtedness income may be excluded under section 108
• Describe which types of debt modifications are treated as exchanges, and the tax consequences
• Differentiate situations that would likely result in COD income and eligible for exclusion
• Identify cases when discharged debt would not be limited for exclusion
• Recognize conditions of insolvency exceptions
• Identify when discharge of indebtedness is included in gross income

Level
Basic

Instructional Method
Group: Internet-based

NASBA Field of Study
Taxes (2 hours)

Program Prerequisites
None

Advance Preparation
None