Bankruptcy and Insolvency Taxation

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.

• Preface ixChapter One: Nature of Bankruptcy and Insolvency Proceedings 11.1 Objectives 21.2 Alternatives Available to a Financially Troubled Business 4Chapter Two: Discharge of Indebtedness 272.1 Introduction 302.2 Discharge of Indebtedness Income 302.3 Determination of Discharge of Indebtedness Income 312.4 Section 108(e) Additions to Discharge of Indebtedness Income 462.5 Section 108(e) Subtractions from Discharge of Indebtedness Income 662.6 Discharge of Indebtedness Income Exclusions 712.7 Consequences of Qualifying for Section 108(a) Exclusions 812.8 Section 108(i) Deferral and Ratable Inclusion of DOI from Business Indebtedness Discharged by the Reacquisition of a Debt Instrument 972.9 Use of Property to Cancel Debt 1062.10 Consolidated Tax Return Treatment 1172.11 Discharge of Indebtedness Reporting Requirements 138Chapter Three: Partnerships and S Corporations: Tax Impact of Workouts and Bankruptcies 1433.1 Introduction 1443.2 Partnerships 1443.3 S Corporations 161Chapter Four: Taxation of Bankruptcy Estates and Debtors 1734.1 Introduction 1744.2 Responsibility for Filing Income Tax Returns 1744.3 Accounting for the Bankruptcy Estate 1774.4 Accounting for the Debtor (Individual) 2154.5 Summary 228Chapter Five: Corporate Reorganizations 2315.1 Introduction 2325.2 Elements Common to Many Reorganization Provisions 2335.3 Overview of Specific Tax-Free Reorganizations under Section 368 2495.4 Acquisitive Asset Reorganizations 2495.5 Stock Acquisitions 2615.6 Single-Entity Reorganizations 2705.7 Divisive Reorganizations 2755.8 Insolvency Reorganizations 2865.9 Summary 309Chapter Six: Use of Net Operating Losses 3116.1 Introduction 3136.2 I.R.C. Section 381 3156.3 Restructuring under Prior I.R.C. Section 382 3206.4 Current I.R.C. Section 382 3226.5 I.R.C. Section 383: Carryovers Other than Net Operating Losses 3966.6 I.R.C. Section 384 3976.7 I.R.C. Section 269: Transactions to Evade or Avoid Tax 4016.8 Libson Shops Doctrine 4066.9 Consolidated Return Regulations 407Chapter Seven: Other Corporate Issues 4257.1 Introduction 4267.2 Earnings and Profits 4267.3 Incorporation 4307.4 Liquidation 4347.5 I.R.C. Section 338 4407.6 Limited Liability Corporation 4547.7 Other Tax Considerations 4547.8 Administrative Expenses 4577.9 Other Administrative Issues 465Chapter Eight: State and Local Taxes 4718.1 Introduction 4718.2 Bankruptcy Estates 4728.3 Stock for Debt 4798.4 Cancellation of Indebtedness 4798.5 Net Operating Loss Carryback and Carryover 4808.6 Stamp Tax 4818.7 Tax Impact of Plan for State and Local Purposes 485Chapter Nine: Tax Consequences to Creditors of Loss from Debt Forgiveness 4879.1 Introduction 4889.2 Nature of Losses 4889.3 Business and Nonbusiness Losses 4909.4 Determination of Worthlessness 5019.5 Secured Debt 5099.6 Reorganization 516Chapter Ten: Tax Procedures and Litigation 51910.1 Introduction 52010.2 Notice and Filing Requirements 52010.3 Tax Determination 52110.4 Bankruptcy Courts 57510.5 Minimization of Tax and Related Payments 578Chapter Eleven: Tax Priorities and Discharge 58111.1 Introduction 58211.2 Priorities 58211.3 Tax Discharge 635Chapter Twelve: Tax Preferences and Liens 66912.1 Introduction 66912.2 Tax Preferences 66912.3 Tax Liens 675About the Authors 703About the Web Site 704Statutes Citations 705Treasury Regulations, Revenue Procedures, and Revenue Rulings Citations 714Case Index 722Subject Index 732