Most real estate projects are owned by either a partnershipgeneral or limitedor a limited liability company (LLC), both of which are governed by the provisions of subchapter K of the Internal Revenue Code. Any restructuring or workout1 of a troubled loan must be tested under the code partnership tax provisions to determine whether there are any adverse tax consequences.
Recognition of COD Income
If a partnership or LLC restructures or modifies a loan, the determination as to whether cancellation of indebtedness income (COD income) has been realized is made at the partnership level. Unless the partnership is able to exclude such COD income from its gross income under a statutory exception (e.g., Code Section 108(e)(2) [income not realized to extent of loss deductions], Code Section 108(e)(5), [purchase money debt reduction exception]) the partnership will be required to recognize such COD income.
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.
For questions call 1-877-256-2472 or contact us at [email protected]
