Discussion:INSOLVENCY QUESTION
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Discussion Forum Index --> Tax Questions --> INSOLVENCY QUESTION
| 11 March 2008 | |
| REDUCTION OF TAX ATTRIBUTES
PUBLICATION 908 If a debtor excludes canceled debt from income because in a case of insolvency, he or she must use the excluded amount to reduce certain “tax attributes.” Tax attributes include the basis of certain assets and the losses and the credits, My question – is a taxpayer in anyway ineligible to claim the exclusion from income due to insolvency. If they don’t have any of the tax attributes – The only attribute that may be in question is assets that utilized section 179 previously | |
Phil Moody (talk|edits) said: | 11 March 2008 |
| NO. | |
| 11 March 2008 | |
| See [Code Sec 108]
Not enough information from your question for me to provide further guidance TexCPA 17:13, 11 March 2008 (CDT) | |
| 11 March 2008 | |
| I've been working on this for awhile now and have not been able to find the firm information that I like to have before finalizing a return.
Clients owed $450,000 on a home - the fair market value of the home was 400,000 - the amount forgiven was $50,000 Trying to deterime if this qualifies for exclusion of income under insolvency rules and if so are there any furhter consequences? | |
| 12 March 2008 | |
| CAI - need to determine all the assets and debts (FMV, not basis) prior to the foregiveness and imeediately following the foregiveness. If taxpayer is insolvent both prior and immediately after the foregiveness, then the 50K (if that is the amount of insolvency) is forst used to reduce tax attributes (NOL, basis in fixed assets, inventory etc). After that, any remaining amount is nontaxable. i would suggest attaching a statement showing the insolvency calcualtion. | |
