CCH Learning Center

Description:
Individuals and businesses routinely go into debt. At any time, but particularly in the midst of a troubled economy such as the recent recession, some will have problems paying off their debts. Their creditors, such as mortgage lenders, credit card companies, merchants, or suppliers, may decide that the borrower is not going to pay the full amount of the debt. In that circumstance, a creditor may forgive or cancel part or all of the debt.

The cancellation of indebtedness rules are complex. Although the creditor may report the COI income under IRS information-reporting requirements and thus usually take the guesswork out of determining whether there has been COI income, the debtor may have a difficult time trying to apply the numerous exclusions and meet the requirements to reduce attributes.

This course discusses the impact on the borrower of a COI and examines a provision enacted in 2009 that defers COI income realized from the forgiveness of certain business debt.

Topics covered in this course include:

• What Constitutes Debt and When it is Discharged
• Recognition of Income
• When COI Income Can Be Excluded
• Special Rules for Pass-Through Entities
• Debt Paid With Stock or Partnership Interest
• Deferral of COI Income