From TaxAlmanac, A Free Online Resource for Tax Professionals
From TaxAlmanac
Discussion Forum Index --> Accounting Questions --> 108(i) deferral
Smi77y (talk|edits) said:
| 10 September 2009
|
| Can anyone lead me in the right direction for the following scenario? I have the authority, (obviously) but can't find any information pertaining to what happens if a debt instrument matures within the deferral period. This would be between related party C corps and the reacquisition of debt. Is there even authority or discussion about this? Thanks in advance.
|
Jimbyh (talk|edits) said:
| 11 September 2009
|
| Not sure I follow. Is the situation that you had debt forgiveness between related parties, and the new note matures within the deferral period? After the forgiveness, was the principal reduced, and it is reduced principal that is maturing?
|
Smi77y (talk|edits) said:
| 11 September 2009
|
| Correct to both of those questions. They are bonds that one company is buying back from another related party at a discounted rate, creating COD income. The principal is maturing before the income has to be recognized. And my question is how is that scenario treated? Is the COD income accelerated due to the bonds maturing? The problem I seem to be finding is this deferral is from the stimulus package this year, and as far as I can tell they don't give any authority on all the situations. So I'm looking for some guidance on where else I could start looking.
|
Jimbyh (talk|edits) said:
| 11 September 2009
|
| Have to get something out the door, but I think the fact pattern that you may want to consider is whether this can be viewed as reacquiring the debt. That would fit with the situation of a non-member becoming a member in the 1502-13(g) regs. And my recollection is that reacquiring or reissuing the debt accelerates the COD. If that is the case, you may have an acceleration. However, since they are related parties, the other party should get the bad debt deduction that may have been deferred under 267(f).
|
To join in on this discussion, you must first
log in.
