Bankruptcy and Insolvency Taxation

by Newton, Grant W.; Liquerman, Robert

• ISBN13: 9781118000779
• ISBN10: 1118000773
• Edition: 4th
• Format: Hardcover
• Copyright: 2012-02-01
• Publisher: Wiley

Summary

The tax implications of bankruptcy and insolvency affect three basic groups: the debtor, the creditor(s), and the bankruptcy estate's trustee. Each must comply with state and federal tax law and the Bankruptcy Code, all of which are complex and difficult to understand. This book discusses the provisions of Bankruptcy Code applicable to businesses that have filed a chapter 7 or chapter 11 bankruptcy petition in detail. Updated chapters will include: Recent case studies and discussion of variation issues arising in S corporations due to the tax advantage. Discussion on the new regulations dealing with consolidated tax return treatment that have major applications to tax impact for companies in chapter 11. The provisions of "The Work, Homeownership, and Business Assistance Act of 2009-5 year NOL Carryback Provision". An introduction to the tax changes in 2005 to the Bankruptcy Code, other tax statues and state tax laws as they impact bankruptcy. Discussion of dealing with tax consequences of liquation or distribution of assets through a plan administration in chapter and/or chapter 11 liquidations. The provisions of the 2005 Bankruptcy Act that modified the extent to which individuals cold obtain a discharge of debts, including taxes.

Author Biography

Grant Newton, CPA, CIRA, CMA (Medford, OR) is?the founder and President of the National Association of Insolvency Accountants. He is also the editor and contributing author of CMA Review (Malibu Publishing). Dr. Newton is a former member of the AICPA's Task Force on Financial Reporting by Entities in Reorganization Under the Bankruptcy Code, which resulted in the issuance of AICPA Statement of Position 90-7. He speaks throughout the United States on bankruptcy and insolvency matters and is frequently an expert witness on bankruptcy issues.

Robert Liquerman (Washington, D.C.) is a principal in KPMG LLP's Washington National Tax Practice, Corporate Tax Group, specializing in matters under Subchapter C of the Internal Revenue Code. He is an adjunct professor of law in the LL.M. program at the Georgetown University Law Center and previously served as an adjunct professor in the LL.M. program at The College of William & Mary, Marshall-Wythe School of Law.?He is a frequent speaker on bankruptcy and tax issues at various tax institutes and conferences around the country.

Table of Contents

Preface	p. ix
Nature of Bankruptcy and Insolvency Proceedings	p. 1
Objectives	p. 2
Alternatives Available to a Financially Troubled Business	p. 4
Discharge of Indebtedness	p. 27
Introduction	p. 30
Discharge of Indebtedness Income	p. 30
Determination of Discharge of Indebtedness Income	p. 31
Section 108(e) Additions to Discharge of Indebtedness Income	p. 46
Section 108(e) Subtractions from Discharge of Indebtedness Income	p. 66
Discharge of Indebtedness Income Exclusions	p. 71
Consequences of Qualifying for Section 108(a) Exclusions	p. 81
Section 108(i) Deferral and Ratable Inclusion of DOI from Business Indebtedness Discharged by the Reacquisition of a Debt Instrument	p. 97
Use of Property to Cancel Debt	p. 106
Consolidated Tax Return Treatment	p. 117
Discharge of Indebtedness Reporting Requirements	p. 138
Partnerships and S Corporations: Tax Impact of Workouts and Bankruptcies	p. 143
Introduction	p. 144
Partnerships	p. 144
S Corporations	p. 161
Taxation of Bankruptcy Estates and Debtors	p. 173
Introduction	p. 174
Responsibility for Filing Income Tax Returns	p. 174
Accounting for the Bankruptcy Estate	p. 177
Accounting for the Debtor (Individual)	p. 215
Summary	p. 228
Corporate Reorganizations	p. 231
Introduction	p. 232
Elements Common to Many Reorganization Provisions	p. 233
Overview of Specific Tax-Free Reorganizations under Section 368	p. 249
Acquisitive Asset Reorganizations	p. 249
Stock Acquisitions	p. v 261
Single-Entity Reorganizations	p. 270
Divisive Reorganizations	p. 275
Insolvency Reorganizations	p. 286
Summary	p. 309
Use of Net Operating Losses	p. 311
Introduction	p. 313
I.R.C. Section 381	p. 315
Restructuring under Prior I.R.C. Section 382	p. 320
Current I.R.C. Section 382	p. 322
I.R.C. Section 383: Carryovers Other than Net Operating Losses	p. 396
I.R.C. Section 384	p. 397
I.R.C. Section 269: Transactions to Evade or Avoid Tax	p. 401
Libson Shops Doctrine	p. 406
Consolidated Return Regulations	p. 407
Other Corporate Issues	p. 425
Introduction	p. 426
Earnings and Profits	p. 426
Incorporation	p. 430
Liquidation	p. 434
I.R.C. Section 338	p. 440
Limited Liability Corporation	p. 454
Other Tax Considerations	p. 454
Administrative Expenses	p. 457
Other Administrative Issues	p. 465
State and Local Taxes	p. 471
Introduction	p. 471
Bankruptcy Estates	p. 472
Stock for Debt	p. 479
Cancellation of Indebtedness	p. 479
Net Operating Loss Carryback and Carryover	p. 480
Stamp Tax	p. 481
Tax Impact of Plan for State and Local Purposes	p. 485
Tax Consequences to Creditors of Loss from Debt Forgiveness	p. 487
Introduction	p. 488
Nature of Losses	p. 488
Business and Nonbusiness Losses	p. 490
Determination of Worthlessness	p. 501
Secured Debt	p. 509
Reorganization	p. 516
Tax Procedures and Litigation	p. 519
Introduction	p. 520
Notice and Filing Requirements	p. 520
Tax Determination	p. 521
Bankruptcy Courts	p. 575
Minimization of Tax and Related Payments	p. 578
Tax Priorities and Discharge	p. 581
Introduction	p. 582
Priorities	p. 582
Tax Discharge	p. 635
Tax Preferences and Liens	p. 669
Introduction	p. 669
Tax Preferences	p. 669
Tax Liens	p. 675
About the Authors	p. 703
About the Web Site	p. 704
Statutes Citations	p. 705
Treasury Regulations, Revenue Procedures, and Revenue Rulings Citations	p. 714
Case Index	p. 722
Subject Index	p. 732
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