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
