IRS explains operation of stock-for-debt exception where cash and stock are transferred to creditor

Article Abstract:

IRS Revenue Ruling 92-52 deals with how the payment of a debt with cash and stock worth less than the debt's value affects the stock-for-debt exception to the rule that termination of indebtedness causes the debtor to earn income. IRS analysis of two factual situations shows that the debt's structure affects the resulting tax burden. Hence the stock-for-debt exception provides an instance of form being more important than substance.

Stocks, Debt equity conversion

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Reduction in debt principal by non-seller of property is not purchase price adjustment unless an infirmity relating back is present

Article Abstract:

The IRS issued Revenue Ruling 92-99 which denied tax exclusions for a mortgage workout that was claimed as cancellation of indebtedness income under IRC section 108. The workout involved a $1 million office building bought in 1988 which dropped to $800,000 in value in 1989. The denial of exclusions for such a typical practice indicates a new hard line by the IRS.

Mortgages, Real property tax, Real property taxes

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Section 1031 nonrecognition available because transferred out property was not held for sale

Article Abstract:

A 1997 Tax Court Memorandum decision ruled the IRS could not deny capital gain nonrecognition when the taxpayer's transferred-out property had not been held for subsequent sale. The court found Ridgmark Corp's ownership and disposition of the property met the nonrecognition test set forth in the the 1969 Winthrop ruling.

Real Estate, Real Estate and Rental and Leasing, United States, Real property exchanges, Cases, Recognition of gain or loss (Taxation), Recognized gain or loss (Taxation), Tax-free exchanges

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