Bankruptcy and Insolvency Taxation, 4th Edition

Preface ix

Chapter One: Nature of Bankruptcy and Insolvency Proceedings 1

§ 1.1 Objectives 2

§ 1.2 Alternatives Available to a Financially Troubled Business 4

Chapter Two: Discharge of Indebtedness 27

§ 2.1 Introduction 30

§ 2.2 Discharge of Indebtedness Income 30

§ 2.3 Determination of Discharge of Indebtedness Income 31

§ 2.4 Section 108(e) Additions to Discharge of Indebtedness Income 46

§ 2.5 Section 108(e) Subtractions from Discharge of Indebtedness Income 66

§ 2.6 Discharge of Indebtedness Income Exclusions 71

§ 2.7 Consequences of Qualifying for Section 108(a) Exclusions 81

§ 2.8 Section 108(i) Deferral and Ratable Inclusion of DOI from Business Indebtedness Discharged by the Reacquisition of a Debt Instrument 97

§ 2.9 Use of Property to Cancel Debt 106

§ 2.10 Consolidated Tax Return Treatment 117

§ 2.11 Discharge of Indebtedness Reporting Requirements 138

Chapter Three: Partnerships and S Corporations: Tax Impact of Workouts and Bankruptcies 143

§ 3.1 Introduction 144

§ 3.2 Partnerships 144

§ 3.3 S Corporations 161

Chapter Four: Taxation of Bankruptcy Estates and Debtors 173

§ 4.1 Introduction 174

§ 4.2 Responsibility for Filing Income Tax Returns 174

§ 4.3 Accounting for the Bankruptcy Estate 177

§ 4.4 Accounting for the Debtor (Individual) 215

§ 4.5 Summary 228

Chapter Five: Corporate Reorganizations 231

§ 5.1 Introduction 232

§ 5.2 Elements Common to Many Reorganization Provisions 233

§ 5.3 Overview of Specific Tax-Free Reorganizations under Section 368 249

§ 5.4 Acquisitive Asset Reorganizations 249

§ 5.5 Stock Acquisitions 261

§ 5.6 Single-Entity Reorganizations 270

§ 5.7 Divisive Reorganizations 275

§ 5.8 Insolvency Reorganizations 286

§ 5.9 Summary 309

Chapter Six: Use of Net Operating Losses 311

§ 6.1 Introduction 313

§ 6.2 I.R.C. Section 381 315

§ 6.3 Restructuring under Prior I.R.C. Section 382 320

§ 6.4 Current I.R.C. Section 382 322

§ 6.5 I.R.C. Section 383: Carryovers Other than Net Operating Losses 396

§ 6.6 I.R.C. Section 384 397

§ 6.7 I.R.C. Section 269: Transactions to Evade or Avoid Tax 401

§ 6.8 Libson Shops Doctrine 406

§ 6.9 Consolidated Return Regulations 407

Chapter Seven: Other Corporate Issues 425

§ 7.1 Introduction 426

§ 7.2 Earnings and Profits 426

§ 7.3 Incorporation 430

§ 7.4 Liquidation 434

§ 7.5 I.R.C. Section 338 440

§ 7.6 Limited Liability Corporation 454

§ 7.7 Other Tax Considerations 454

§ 7.8 Administrative Expenses 457

§ 7.9 Other Administrative Issues 465

Chapter Eight: State and Local Taxes 471

§ 8.1 Introduction 471

§ 8.2 Bankruptcy Estates 472

§ 8.3 Stock for Debt 479

§ 8.4 Cancellation of Indebtedness 479

§ 8.5 Net Operating Loss Carryback and Carryover 480

§ 8.6 Stamp Tax 481

§ 8.7 Tax Impact of Plan for State and Local Purposes 485

Chapter Nine: Tax Consequences to Creditors of Loss from Debt Forgiveness 487

§ 9.1 Introduction 488

§ 9.2 Nature of Losses 488

§ 9.3 Business and Nonbusiness Losses 490

§ 9.4 Determination of Worthlessness 501

§ 9.5 Secured Debt 509

§ 9.6 Reorganization 516

Chapter Ten: Tax Procedures and Litigation 519

§ 10.1 Introduction 520

§ 10.2 Notice and Filing Requirements 520

§ 10.3 Tax Determination 521

§ 10.4 Bankruptcy Courts 575

§ 10.5 Minimization of Tax and Related Payments 578

Chapter Eleven: Tax Priorities and Discharge 581

§ 11.1 Introduction 582

§ 11.2 Priorities 582

§ 11.3 Tax Discharge 635

Chapter Twelve: Tax Preferences and Liens 669

§ 12.1 Introduction 669

§ 12.2 Tax Preferences 669

§ 12.3 Tax Liens 675

About the Authors 703

About the Web Site 704

Statutes Citations 705

Treasury Regulations, Revenue Procedures, and Revenue Rulings Citations 714

Case Index 722

Subject Index 732