Contingent payment debt instruments - a light at the end of the tunnel

Article Abstract:

The proposed IRS regulations under IRC section 1275 regarding accrual of interest on contingent debt instruments reverse prior adherence to bifurcation and open transaction principles. The integrity of instruments with fixed and contingent components will be respected by the IRS. The interest imputed to a given instrument will be specific to that instrument and not based on an IRS standard. These rules, while needing refinement, are expected to be well-received by practitioners.

United States, Accounting and auditing, Bonds, Bonds (Securities), Discount (Finance)

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Rethinking the tax aspects of debt restructuring

Article Abstract:

The taxation of cancellation of indebtedness (COD) should be changed. A new method would use the fair value of the creditor's claim as the measure of COD income, which would avoid the problems of IRC section 382 for debt restructures. A fair value approach would have to be integrated with exchanges of debt for debt, IRC section 1274 on untraded debt prices, trades of stock for debt and unamortized COD.

External debt relief, Debt relief

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S Corporations - Tax Court Reverses Prior Stance on Cancellation of Indebtedness Income of an S Corporation

Article Abstract:

In a decision, the Tax Court held that Internal Revenue could tax partnerships for benefits derived from extinguishment of debts under the Revenue Code.

Corporations, Reports, Corporate taxes, Tax exclusion, Judgments, Judgments (Law)

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