Suspension of Applicable High-Yield Discount Obligation Regime for 2010

Congress suspended the applicable high-yield discount obligation (AHYDO) rules under Sec. 163(e)(5) for certain debt-for-debt exchanges occurring between September 1, 2008, and December 31, 2009. Notice 2010-11 extended the suspension of the AHYDO regime through December 31, 2010, but with additional requirements.

Accounting for Government Grants

Letter Ruling 201003005 concludes that (1) nonreimbursable payments from the government to a corporate taxpayer to construct a plant are nonshareholder contributions to the capital of the taxpayer under Sec. 118(a) and are excluded from the taxpayer’s gross income under Sec. 61, and (2) the basis of the plant’s capital assets acquired by the taxpayer with the money contributed by the government is reduced according to Sec. 362(c).

Tax Planning for Troubled Debt

Today’s volatile real estate environment presents interesting opportunities for investors and developers to alter the terms of their debts in ways that may pay off if they can retain control of their projects.

Should a Company Elect to Defer Cancellation of Debt?

The American Recovery and Reinvestment Act of 2009 provides certain business debtors with a cancellation of debt (COD) income deferral election under new Sec. 108(i) for reacquisitions by the debtor or by certain related parties of applicable debt instruments after December 31, 2008, and before January 1, 2011.

Discharge of Indebtedness: Conversion vs. Contribution of Indebtedness

In an effort to de-leverage, more and more creditors, particularly those also holding an equity position, are willing to accept repayment for less than the face amount of the debt. Apart from settling the debt in cash for less than its face value, there are other methods debtors and creditors may use to modify, reduce, or even eliminate debt.

Corporate Cancellation of Debt Relief

Editor: Frank J. O’Connell Jr., CPA, Esq. The recent economic downturn coupled with the tightening of the credit market has forced many financially distressed corporations to renegotiate the terms of their maturing debt obligations. As little as 12 months ago, these companies would have been able to refinance their maturing

Uncertainty Governs Advance Trade Discounts

This article discusses conflicting court opinions and IRS guidance on advance trade discounts and the merits of treating them as purchase price adjustments instead of income or loans.

Third Circuit Holds That Advance Payments of Trade Discounts Are Income on Receipt

Karns Prime & Fancy Food, Ltd. (Karns), is a Pennsylvania corporation that operates grocery stores in the Harrisburg, Pennsylvania,area. In 1998,Karns’s management determined that the company required $1.5 million for capital improvements to its stores. Karns approached its primary supplier, Super Rite, Inc., about borrowing funds from it to make

IRS Reaffirms and Clarifies Its Position on Nonaccrual Loan Interest

Editor: Frank J. O'Connell, Jr., CPA, Esq. For accrual-basis financial institutions, there has long been a debate on the taxability of interest for loans that are past due. This debate centers on the difference in treatment between federal banking and IRS rules. Bank regulatory guidance always requires that the interest

Tax Insider Articles


Business meal deductions after the TCJA

This article discusses the history of the deduction of business meal expenses and the new rules under the TCJA and the regulations and provides a framework for documenting and substantiating the deduction.


Quirks spurred by COVID-19 tax relief

This article discusses some procedural and administrative quirks that have emerged with the new tax legislative, regulatory, and procedural guidance related to COVID-19.