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In today’s economic environment many companies are considering and obtaining debt restructuring from creditors. For an S Corporation and their shareholders, there are several significant tax provisions which could impact the results of a debt discharge or debt modification. This live event addressed both Section 108(i) of the Internal Revenue Code which was enacted as part of The American Recovery Act of 2009, and with the proposed regulations under Section 108 of the Internal Revenue Code, dealing with forgiveness of debt of an S Corporation. Section 108(i) gives entities an election to defer the recognition and the tax resulting from certain forgiveness of debt. The proposed regulations deal with the manner in which the shareholders of an insolvent S Corporation reduce their "tax attributes" under Section 108. This live event first dealt with the basics and subsequently discussed the tax ramifications and decisions that must be made in order to arrive at the best tax consequence resulting from any debt forgiveness of an S Corporation. Presentation Objectives: This 60-90 minute webinar covered timely topics concerning debt forgiveness of an S Corporation including: - The new rules with regard electing the deferral of income resulting from the discharge of debt
- What constitute a debt discharge
- Impact of making the election on an entity level
- What factors would accelerate deferral of income
- When would it be disadvantageous to defer the income
- Proposed regulations concerning the reduction of tax attributes upon the discharge of debt of an insolvent or bankrupt S Corporation
- How the rules concerning debt discharge of an insolvent or bankrupt S Corporation impact both the tax basis of the shareholders and their utilization of entity level losses
- The interplay between the provisions available to S Corporations and considerations in obtaining the most favorable result
Educational Objectives: - Identify debt modifications that could have a significant taxable impact on an S Corporation
- Apply the tax rules to any situation of an S Corporation which has a discharge of debt
- Minimize the tax effect from debt modifications of either solvent or insolvent S Corporation
- Understand certain circumstances and complexities which the IRS has not yet addressed
Recorded on July 29, 2009, this event is available on CD for purchase.
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