Per the IRS Education Provider Standards this course must be COMPLETED by 12/31/2024 to receive credits. NOTE: Go to My Professional Profile in your CCH CPELink account settings to ensure your name, and PTIN number; matches your PTIN card
Despite special CARES Act and Consolidated Appropriations Act provisions designed to keep businesses afloat during the economic downturn, many borrowers are likely to have trouble making interest and principal payments on debt obligations this year. In many cases, the CARES Act and Consolidated Appropriations Act do not change the general tax rules that apply to debtors and lenders. This webinar covers important tax consequences and considerations for holders and issuers of distressed debt.
Publication Date: May 2021
Designed For
Tax practitioners at all levels who advise borrowers who may be renegotiating debts or lenders holding or acquiring distressed debt.
Topics Covered
- Definition of Debt and Basic Distinctions from Equity
- Debt modification rules in context of debt workouts, from both holder and issuer perspectives
- Tax consequences to holders of purchasing distressed debt at a discount and later resale
- Debt Workouts Resulting in Bad Debt Deduction
- OID and interest accrual on distressed debt
Learning Objectives
- Recognize how modifying terms of debt instruments may result in income/loss to holder and issuer
- Describe the consequences of acquiring distressed debt at discount and holding until maturity or resale
- Discuss cancellation of indebtedness consequences for pass through entity borrowers
- Identify common issues involving interest accrual and interest deduction for distressed debt
- Recognize which type of capitalization shareholder loans are most vulnerable to recharacterization
- Describe a modification of debt
- Identify the sum of all payments provided by the debt instrument other than qualified stated interest
Level
Basic
Instructional Method
Self-Study
NASBA Field of Study
Taxes (2 hours)
Program Prerequisites
TBD
Advance Preparation
None
Instructor
Jennifer Kowal
Jennifer Kowal, JD, has been a tax professor and the director of the graduate tax program at Loyola Law School in Los Angeles since 2003. Loyola’s graduate tax program offers an LL.M. in Taxation for attorneys and a Master in Tax Law for non-lawyers. Professor Kowal teaches courses in advanced income taxation, income tax timing issues, corporate taxation, and tax research, among others. Prior to teaching at Loyola, Professor Kowal taught in the International Tax Program at Harvard Law School.
She also practiced law with the firms of Irell & Manella in Los Angeles and Ropes & Gray in Boston, advising clients on the taxation of various business transactions, including cross-border, partnership and corporate structures. Professor Kowal holds a BS in Accounting with distinction from the University of Kansas, and a JD from UCLA School of Law, where she was a member of the Order of the Coif.