Contents

Cover

Series

Title Page

Copyright

Preface

CHAPTER ONE: Nature of Bankruptcy and Insolvency Proceedings

§ 1.1 Objectives

§ 1.2 ALTERNATIVES AVAILABLE TO A FINANCIALLY TROUBLED BUSINESS

CHAPTER TWO: Discharge of Indebtedness

§ 2.1 INTRODUCTION

§ 2.2 DISCHARGE OF INDEBTEDNESS INCOME

§ 2.3 DETERMINATION OF DISCHARGE OF INDEBTEDNESS INCOME

§ 2.4 SECTION 108(e) ADDITIONS TO DISCHARGE OF INDEBTEDNESS INCOME

§ 2.5 SECTION 108(e) SUBTRACTIONS FROM DISCHARGE OF INDEBTEDNESS INCOME

§ 2.6 DISCHARGE OF INDEBTEDNESS INCOME EXCLUSIONS

§ 2.7 CONSEQUENCES OF QUALIFYING FOR SECTION 108(a) EXCLUSIONS

§ 2.8 SECTION 108(i) DEFERRAL AND RATABLE INCLUSION OF DOI FROM BUSINESS INDEBTEDNESS DISCHARGED BY THE REACQUISITION OF A DEBT INSTRUMENT

§ 2.9 USE OF PROPERTY TO CANCEL DEBT

§ 2.10 CONSOLIDATED TAX RETURN TREATMENT

§ 2.11 DISCHARGE OF INDEBTEDNESS REPORTING REQUIREMENTS

CHAPTER THREE: Partnerships and S Corporations

§ 3.1 INTRODUCTION

§ 3.2 PARTNERSHIPS

§ 3.3 S CORPORATIONS

CHAPTER FOUR: Taxation of Bankruptcy Estates and Debtors

§ 4.1 INTRODUCTION

§ 4.2 RESPONSIBILITY FOR FILING INCOME TAX RETURNS

§ 4.3 ACCOUNTING FOR THE BANKRUPTCY ESTATE

§ 4.4 ACCOUNTING FOR THE DEBTOR (INDIVIDUAL)

§ 4.5 SUMMARY

CHAPTER FIVE: Corporate Reorganizations

§ 5.1 INTRODUCTION

§ 5.2 ELEMENTS COMMON TO MANY REORGANIZATION PROVISIONS

§ 5.3 OVERVIEW OF SPECIFIC TAX-FREE REORGANIZATIONS UNDER SECTION 368

§ 5.4 ACQUISITIVE ASSET REORGANIZATIONS

§ 5.5 STOCK ACQUISITIONS

§ 5.6 SINGLE-ENTITY REORGANIZATIONS

§ 5.7 DIVISIVE REORGANIZATIONS

§ 5.8 INSOLVENCY REORGANIZATIONS

§ 5.9 SUMMARY

CHAPTER SIX: Use of Net Operating Losses

§ 6.1 INTRODUCTION

§ 6.2 I.R.C. SECTION 381

§ 6.3 RESTRUCTURING UNDER PRIOR I.R.C. SECTION 382

§ 6.4 CURRENT I.R.C. SECTION 382

§ 6.5 I.R.C. SECTION 383: CARRYOVERS OTHER THAN NET OPERATING LOSSES

§ 6.6 I.R.C. SECTION 384

§ 6.7 I.R.C. SECTION 269: TRANSACTIONS TO EVADE OR AVOID TAX

§ 6.8 LIBSON SHOPS DOCTRINE

§ 6.9 CONSOLIDATED RETURN REGULATIONS

CHAPTER SEVEN: Other Corporate Issues

§ 7.1 INTRODUCTION

§ 7.2 EARNINGS AND PROFITS

§ 7.3 INCORPORATION

§ 7.4 LIQUIDATION

§ 7.5 I.R.C. SECTION 338

§ 7.6 LIMITED LIABILITY CORPORATION

§ 7.7 OTHER TAX CONSIDERATIONS

§ 7.8 ADMINISTRATIVE EXPENSES

§ 7.9 OTHER ADMINISTRATIVE ISSUES

CHAPTER EIGHT: State and Local Taxes

§ 8.1 INTRODUCTION

§ 8.2 BANKRUPTCY ESTATES

§ 8.3 STOCK FOR DEBT

§ 8.4 CANCELLATION OF INDEBTEDNESS

§ 8.5 NET OPERATING LOSS CARRYBACK AND CARRYOVER

§ 8.6 STAMP TAX

§ 8.7 TAX IMPACT OF PLAN FOR STATE AND LOCAL PURPOSES

CHAPTER NINE: Tax Consequences to Creditors of Loss from Debt Forgiveness

§ 9.1 INTRODUCTION

§ 9.2 NATURE OF LOSSES

§ 9.3 BUSINESS AND NONBUSINESS LOSSES

§ 9.4 DETERMINATION OF WORTHLESSNESS

§ 9.5 SECURED DEBT

§ 9.6 REORGANIZATION

CHAPTER TEN: Tax Procedures and Litigation

§ 10.1 INTRODUCTION

§ 10.2 NOTICE AND FILING REQUIREMENTS

§ 10.3 TAX DETERMINATION

§ 10.4 BANKRUPTCY COURTS

§ 10.5 MINIMIZATION OF TAX AND RELATED PAYMENTS

CHAPTER ELEVEN: Tax Priorities and Discharge

§ 11.1 INTRODUCTION

§ 11.2 PRIORITIES

§ 11.3 TAX DISCHARGE

CHAPTER TWELVE: Tax Preferences and Liens

§ 12.1 INTRODUCTION

§ 12.2 TAX PREFERENCES

§ 12.3 TAX LIENS

About the Authors

About the Web Site

Statutes Citations

Treasury Regulations, Revenue Procedures, and Revenue Rulings Citations

Case Index

Subject Index

Appendix A: Internal Revenue Code: Selected Sections

SEC. 108. INCOME FROM DISCHARGE OF INDEBTEDNESS

SEC. 312. EFFECT ON EARNINGS AND PROFITS

SEC. 331. GAIN OR LOSS TO SHAREHOLDERS IN CORPORATE LIQUIDATIONS

SEC. 332. COMPLETE LIQUIDATIONS OF SUBSIDIARIES

SEC. 336. GAIN OR LOSS RECOGNIZED ON PROPERTY DISTRIBUTED IN COMPLETE LIQUIDATION

SEC. 337. NONRECOGNITION FOR PROPERTY DISTRIBUTED TO PARENT IN COMPLETE LIQUIDATION OF SUBSIDIARY

SEC. 338. CERTAIN STOCK PURCHASES TREATED AS ASSET ACQUISITIONS

SEC. 351. TRANSFER TO CORPORATION CONTROLLED BY TRANSFEROR

SEC. 354. EXCHANGES OF STOCK AND SECURITIES IN CERTAIN REORGANIZATIONS

SEC. 355. DISTRIBUTION OF STOCK AND SECURITIES OF A CONTROLLED CORPORATION

SEC. 356. RECEIPT OF ADDITIONAL CONSIDERATION

SEC. 357. ASSUMPTION OF LIABILITY

SEC. 358. BASIS TO DISTRIBUTEES

SEC. 361. NONRECOGNITION OF GAIN OR LOSS TO CORPORATIONS; TREATMENT OF DISTRIBUTIONS

SEC. 368. DEFINITIONS RELATING TO CORPORATE REORGANIZATIONS

SEC. 381. CARRYOVERS IN CERTAIN CORPORATE ACQUISITIONS

SEC. 382. LIMITATION ON NET OPERATING LOSS CARRYFORWARDS AND CERTAIN BUILT-IN LOSSES FOLLOWING OWNERSHIP CHANGE

SEC. 383. SPECIAL LIMITATIONS ON CERTAIN EXCESS CREDITS, ETC

SEC. 384. LIMITATION ON USE OF PREACQUISITION LOSSES TO OFFSET BUILT-IN GAINS

SEC. 1017. DISCHARGE OF INDEBTEDNESS

SEC. 1398. RULES RELATING TO INDIVIDUALS’ TITLE 11 CASES

SEC. 1399. NO SEPARATE TAXABLE ENTITIES FOR PARTNERSHIPS, CORPORATIONS, ETC.

SEC. 6103. CONFIDENTIALITY AND DISCLOSURE OF RETURNS AND RETURN INFORMATION

Appendix B: Senate Report No. 96-1035 on H.R. 5043—Bankruptcy Tax Act of 1980

BANKRUPTCY TAX ACT OF 1980

I. SUMMARY

II. EXPLANATION OF THE BILL

III. EFFECT OF THE BILL ON THE BUDGET AND VOTE OF THE COMMITTEE IN REPORTING THE BILL AS AMENDED

IV. REGULATORY IMPACT OF THE BILL

V. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

Appendix C: Senate Proposed Amendments to H.R. 5043 (Bankruptcy Tax Act of 1980) Adopted by Both Senate and House

BANKRUPTCY TAX ACT OF 1980

SEC. 7. EFFECTIVE DATES

SECTION 2 (TAX TREATMENT OF DISCHARGE OF INDEBTEDNESS)

SECTION 3 (RULES RELATING TO TITLE CASES FOR INDIVIDUALS)

SECTION 5 (MISCELLANEOUS CORPORATE AMENDMENTS)

PROVIDING CERTAINTY IN THE TAX LAWS

FINANCE COMMITTEE PRO-DEBTOR AMENDMENT

TIME FOR FINE TUNING NEXT YEAR

Appendix D: Representative Ullman’s Statement Regarding Bankruptcy Tax Legislation

REQUEST TO CONCUR IN SENATE AMENDMENTS TO H.R. 5043, BANKRUPTCY TAX ACT OF 1980

SEC. 7. EFFECTIVE DATES

BANKRUPTCY TAX ACT OF 1980

SEC. 7. EFFECTIVE DATES

“STOCK-FOR-DEBT” RULES

EFFECTIVE DATE PROVISIONS

TECHNICAL AMENDMENTS

SECTION 2.’TAX TREATMENT OF DISCHARGE OF INDEBTEDNESS

SECTION 3.’RULES RELATING TO TITLE 11 CASES FOR INDIVIDUALS

SECTION 5.’MISCELLANEOUS CORPORATE AMENDMENTS

GENERAL LEAVE

Appendix E: Selected Provisions from the General Explanation of the Tax Reform Act of 1986

DISCHARGE OF INDEBTEDNESS INCOME FOR CERTAIN FARMERS (SEC. 405 OF THE ACT AND SECS. 108 AND 1017 OF THE CODE)

SPECIAL LIMITATIONS ON NET OPERATING LOSS AND OTHER CARRYFORWARDS (SEC. 621 OF THE ACT AND SECS. 382 AND 383 OF THE CODE)

RECOGNITION OF GAIN OR LOSS ON LIQUIDATING SALES AND DISTRIBUTIONS OF PROPERTY (GENERAL UTILITIES) (SECS. 631, 632, AND 633 OF THE ACT AND SECS. 336, 337, AND 1374 OF THE CODE)3

CANCELLATION OF INDEBTEDNESS FOR SOLVENT TAXPAYERS (SEC. 822 OF THE ACT AND SEC. 108 OF THE CODE)

Appendix F: Selected Provisions from the Explanation of the Technical and Miscellaneous Revenue Act of 1988

HOUSE WAYS AND MEANS COMMITTEE REPORT NO. 100-795, JULY 26, 1988 (“HOUSE COMMITTEE REPORT”)

SENATE FINANCE COMMITTEE REPORT NO. 100-445, AUGUST 3, 1988 (“SENATE COMMITTEE REPORT”)

JOINT COMMITTEE ON TAXATION EXPLANATION OF SENATE CONSENSUS AMENDMENT, JCX-28-88, SEPTEMBER 12, 1988

CONFERENCE COMMITTEE REPORT, STATEMENT OF THE MANAGERS, OCTOBER 24, 1988 (“CONFERENCE COMMITTEE REPORT”)

ACT § 1006 AND FRC § 336, 368, AND 382 SENATE COMMITTEE REPORT

SPECIAL LIMITATIONS ON NET OPERATING LOSS AND OTHER CARRYFORWARDS

RECOGNITION OF GAIN OR LOSS ON LIQUIDATING SALES AND DISTRIBUTIONS OF PROPERTY (GENERAL UTILITIES)

JOINT COMMITTEE EXPLANATION OF SENATE CONSENSUS AMENDMENT

HOUSE COMMITTEE REPORT

CONFERENCE COMMITTEE REPORT

ACT SEC. 4012 AND IRC § 382: FINANCIAL INSTITUTIONS

ACT SEC. 1004 AND IRC § 108(G): TREATMENT OF DISCHARGE OF INDEBTEDNESS INCOME OF CERTAIN FARMERS

ACT SEC. 1018(D)(5) AND IRC § 361: EARNINGS AND PROFITS

Appendix G: In re Fremont General Corporation: Tax Consequences of Plan

F. TAX CONSEQUENCES OF PLAN