Cancellation of Debt (COD) Income
Time is Running Out to Defer Cancellation of Indebtedness Income
The current “Great Recession” has caused a number of developers to be either overextended and unable to meet debt obligations or stuck with properties that are worth less than the debt securing them. In many instances, lenders are working with developers and other property owners to modify or even cancel debts on property. Depending on the borrower’s individual situation, cancellation of debt in full or in part can result in an unintended tax liability. Cancellation of debt (COD) occurs when an outstanding liability is reduced or forgiven. COD income is generally taxable unless the debtor is in bankruptcy or is. Read More.
IRS Finalizes Regulations on Section 108 Reduction of Tax Attributes for S Corps
IRC Section 108 provides mandatory relief provisions requiring bankrupt or insolvent taxpayers to exclude debt discharge income (COD income) from gross income. It also provides that certain tax attributes must be reduced by the amount of excluded COD income. If the excluded COD income exceeds the amount of tax attributes available for reduction, then the “excess” COD income disappears with no further tax consequences to the debtor. Special rules apply to S Corps. These rules provide that the mandatory relief provisions apply at the corporate level, including the determination of insolvency. COD income that is excluded from an S Corp’s income under these provisions for. Read More.
Consider Recent Tax Law Changes as You Prepare Your Tax Return
As tax time approaches, businesses in the real estate and construction sectors will have to reconcile a challenging 2009. However, several pieces of legislation were signed into law over the course of the year that can provide some assistance, particularly to the residential construction industry. Before starting on your 2009 tax return, you should be aware of the following provisions. New Net Operating Loss Carryback Provisions The longstanding rule related to carrybacks of net operating losses (NOLs) allowed losses to be carried back to the two preceding tax years. Any unused NOLs were then carried forward for 20 years (which. Read More.
CB&H’s RECon News – Fall 2009 Issue Now Available
The Fall 2009 issue of CB&H’s RECon News mailed this week. Do you subscribe to this free quarterly newsletter? If not, don’t miss another issue — click here to sign up today . Articles in the current issue include the following: Distressed Real Estate Assets Offer Challenges and Opportunities Economic Conditions Require More Frequent Fraud Risk Assessments IRS Issues Guidance for Making the Election to Defer Cancellation of Indebtedness Income Repair or Replace? Tax Planning Should Guide Equipment Decisions Where Are You Doing Business? Click here to download a pdf version of the most recent issue.
Outlook at 19th Annual Real Estate Trends Conference Still Sees Long Road Ahead
The annual Real Estate Trends Conference , held last week at Virginia Commonwealth University in Richmond, Virginia , delivered a less than enthusiastic outlook for 2010 Real Estate markets. Liquidity was the order of the day as professionals on all sides of the industry gave a similar message to attendees — it will be a long, tough haul but, with planning, diligence, and a bit of luck, we’ll make it through to the other side. Sally Gordon , managing director of BlackRock advisors, and Jeffery DeBoer , President, CEO and longtime lobbyist with Real Estate Roundtable, championed liquidity in an uncertain market. Gordon compared 2007 home valuations to the dot-com “phantom valuations.” It is possible, she. Read More.
The District of Columbia’s New Budget Includes Several Tax Increases
To close the gap in its budget, The District of Columbia recently passed the “ Fiscal Year 2010 Budget Support Emergency Act of 2009 ” (the Act). The legislation comprises chiefly of tax rate increases, including income, sales, property, tobacco and gas taxes. The budget also reduces costs by expanding the requirements to file electronically. Income Taxes Effective for taxable years beginning December 31, 2008, the legislation excludes from District taxable gross income cancellation of indebtedness (COD) income under IRC § 108(i). The Act also redefines “gross income” to align with the definition under IRC § 61 as of December 31, 2008, in reference to sales and excise taxes on certain motor vehicle purchases.. Read More.