Corporations - Income

TOPICS / CORPORATIONS

July 1, 2009

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.

April 1, 2009

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.

January 1, 2009

Lenders Allowed Nonrecognition Treatment for Certain Securities Loans Terminated Due to Bankruptcy

Rev. Proc. 2008-63 permits securities lenders continued nonrecognition treatment under Sec. 1058(a) for certain securities loans terminated due to the bankruptcy of the securities borrower, provided the lender applies the collateral to the purchase of identical securities within 30 days of the default.

September 1, 2008

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

May 1, 2008

Debt Discharge in Corporate Recapitalizations: Avoiding Surprises

Recapitalizations in which corporate debt is restructured or discharged are assuming a new prominence in the current economy.

April 1, 2008

Tax Treatment of Payments in Common Pharmaceutical Agreements

The Service outlined its position on the treatment of the various types of payments under pharmaceutical collaboration agreements in a coordinated issue paper.

February 1, 2008

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.

January 1, 2008

Cash Settlement and Note from Investment Adviser Are Qualifying RIC Income

The IRS ruled that a regulated investment company’s receipt of cash and a note from its investment adviser are qualifying income under Sec. 851(b)(2).

November 1, 2007

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

September 1, 2007

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