What is included in cancellation of debt income?
Your ordinary income from the cancellation of the debt is the amount of the debt in excess of the FMV of the property that the lender forgives. You must include this cancellation of debt in your income unless an exception or exclusion, discussed below, applies.
What is a 108 I election?
108(i) generally provides relief to corporate and certain other business taxpayers by giving them an option to irrevocably elect to defer recognition of cancellation-of-debt (COD) income resulting from a reacquisition of applicable debt instruments in tax years 2009 and 2010.
What is qualified principal residence exclusion?
If only a part of a loan is qualified principal residence indebtedness, the exclusion applies only to the extent the amount discharged exceeds the amount of the loan (immediately before the discharge) that is not qualified principal residence indebtedness.
How is discharge of indebtedness treated?
For purposes of determining income of a debtor from discharge of indebtedness, if a debtor issues a debt instrument in satisfaction of indebtedness, such debtor shall be treated as having satisfied the indebtedness with an amount of money equal to the issue price of such debt instrument.
What is Section 108 (b) (2)?
section 108(b) requires the reduction of certain tax attributes in an amount that reflects the amount excluded from gross income, thereby generally deferring, rather than permanently eliminating, the inclusion of COD income. Section 108(b)(2) requires the reduction of the following tax attributes of the
What is income from discharge of indebtedness under IRS code 108?
Internal Revenue Code § 108. Income from discharge of indebtedness (a) Exclusion from gross income.– (1) In general. –Gross income does not include any amount which (but for this subsection) would be includible in gross income by reason of the discharge (in whole or in part) of indebtedness of the taxpayer if–
What is Title 26 of the Internal Revenue Code 108?
Internal Revenue Code § 108 | FindLaw Title 26. Internal Revenue Code 26 U.S.C. § 108 – U.S. Code – Unannotated Title 26. Internal Revenue Code § 108. Income from discharge of indebtedness (a) Exclusion from gross income.– (1) In general.
What are the basis reduction ordering rules for Sec 108 (b)?
Sec. 108 (b) provides basis reduction ordering rules for various other exclusions in Sec. 108 from COD income, but it does not provide rules on basis reduction for a purchase price reduction.