Thông tin tài liệu
Bankruptcy &
Insolvency Taxation
Third Edition
Grant W. Newton
Robert Liquerman
JOHN WILEY & SONS, INC.
BANKRUPTCY &
INSOLVENCY TAXATION
Third Edition
BECOME A SUBSCRIBER!
Did you purchase this product from a bookstore?
If you did, it’s important for you to become a subscriber. John Wiley & Sons, Inc. may
publish, on a periodic basis, supplements and new editions to reflect the latest changes in
the subject matter that you
need to know
in order to stay competitive in this ever-changing
industry. By contacting the Wiley office nearest you, you’ll receive any current update at no
additional charge. In addition, you’ll receive future updates and revised or related volumes
on a 30-day examination review.
If you purchased this product directly from John Wiley & Sons, Inc., we have already
recorded your subscription for this update service.
To become a subscriber, please call 1-877-762-2974 or send your name, company name (if
applicable), address, and the title of the product to:
mailing address: Supplement Department
John Wiley & Sons, Inc.
One Wiley Drive
Somerset, NJ 08875
e-mail: subscriber@wiley.com
fax: 1-732-302-2300
online: www.wiley.com
For customers outside the United States, please contact the Wiley office nearest you:
Professional & Reference Division John Wiley & Sons, Ltd.
John Wiley & Sons Canada, Ltd. The Atrium
22 Worcester Road Southern Gate, Chichester
Etobicoke, Ontario M9W 1L1 West Sussex PO 19 8SQ
CANADA ENGLAND
Phone: 416-236-4433 Phone: 44-1243-779777
Phone: 1-800-567-4797 Fax: 44-1243-775878
Fax: 416-236-4447 Email: customer@wiley.co.uk
Email: canada@wiley.com
John Wiley & Sons Australia, Ltd. John Wiley & Sons (Asia) Pte., Ltd.
33 Park Road 2 Clementi Loop #02-01
P.O. Box 1226 SINGAPORE 129809
Milton, Queensland 4064 Phone: 65-64632400
AUSTRALIA Fax: 65-64634604/5/6
Phone: 61-7-3859-9755 Customer Service: 65-64604280
Fax: 61-7-3859-9715 Email: enquiry@wiley.com.sg
Email: brisbane@johnwiley.com.au
Bankruptcy &
Insolvency Taxation
Third Edition
Grant W. Newton
Robert Liquerman
JOHN WILEY & SONS, INC.
This book is printed on acid-free paper.
Copyright © 2005 by John Wiley & Sons, Inc. All rights reserved.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
Published simultaneously in Canada.
No part of this publication may be reproduced, stored in a retrieval system, or
transmitted in any form or by any means, electronic, mechanical, photocopying,
recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the
1976 United States Copyright Act, without either the prior written permission of the
Publisher, or authorization through payment of the appropriate per-copy fee to the
Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, 978-750-
8400, fax 978-646-8600, or on the web at www.copyright.com. Requests to the Publisher for
permission should be addressed to the Permissions Department, John Wiley & Sons, Inc.,
111 River Street, Hoboken, NJ 07030, 201-748-6011, fax 201-748-6008, or online at
http://www.wiley.com/go/permission.
Limit of Liability/Disclaimer of Warranty: While the publisher and author have used
their best efforts in preparing this book, they make no representations or warranties with
respect to the accuracy or completeness of the contents of this book and specifically
disclaim any implied warranties of merchantability or fitness for a particular purpose. No
warranty may be created or extended by sales representatives or written sales materials.
The advice and strategies contained herein may not be suitable for your situation. You
should consult with a professional where appropriate. Neither the publisher nor author
shall be liable for any loss of profit or any other commercial damages, including but not
limited to special, incidental, consequential, or other damages.
For general information on our other products and services, or technical support, please
contact our Customer Care Department within the United States at 800-762-2974, outside
the United States at 317-572-3993 or fax 317-572-4002.
Wiley also publishes its books in a variety of electronic formats. Some content that appears in print
may not be available in electronic books.
For more information about Wiley products, visit our Web site at www.wiley.com.
ISBN-13: 978-0-471-22808-0
ISBN-10: 0-471-22808-7
Library of Congress Cataloging-in-Publication Data:
Newton, Grant W.
Bankruptcy and insolvency taxation / Grant W. Newton, Robert Liquerman
3rd ed.
p. cm.
Includes index.
ISBN-10: 0-471-22808-7 (cloth : alk. paper)
ISBN-13: 978-0-471-22808-0
1. Bankruptcy Taxation United States. I. Liquerman, Robert. II. Title.
KF6332.N49 2005
346.7305'2 dc22
2004025813
Printed in the United States of America
10987654321
n v n
About the Authors
Grant W. Newton, Professor of Accounting, Graziadio School of Business and
Management, Pepperdine University, Malibu, California, is the author of Bank-
ruptcy and Insolvency Accounting; Practice and Procedure (updated annually) and
Corporate Bankruptcy (2003), also published by John Wiley & Sons. He is the
Executive Director of the Association of Insolvency and Restructuring Advisors
and he developed and teaches the three courses that lead to the Certified Insol-
vency and Restructuring Advisor (CIRA) designation. A CPA, CIRA, and CMA,
he received a Ph.D. from New York University, a Master’s degree from the Uni-
versity of Alabama, and a B.S. Degree from the University of North Alabama.
Dr. Newton was a member of the AICPA’s Task Force on Financial Report-
ing by Entities in Reorganization Under the Bankruptcy Code that resulted in
the issuance of the Statement of Position 90-7. He is coauthor of Consulting Ser-
vices Practice Aid 02-1: Business Valuation in Bankruptcy and Providing Bankruptcy
& Reorganization Services—Practice Aid, both published by the AICPA. He serves
as a consultant and expert witness on issues dealing with financial reporting
during and emerging from chapter 11, valuation, terms of plan, tax impact of
plan, tax issues related to the bankruptcy estate, and recovery of assets.
Robert Liquerman is a principal in KPMG LLP’s Washington National Tax Prac-
tice, Corporate Tax Group, specializing in matters under Subchapter C of the
Internal Revenue Code. He is an adjunct professor of law in the LL.M. program
at the Georgetown University Law Center and previously served as an adjunct
professor in the LL.M. program at The College of William & Mary, Marshall-
Wythe School of Law. Mr. Liquerman holds an LL.M. in Taxation from New
York University School of Law; a J.D. from St. John’s University, School of Law;
and a B.S. in Accounting from the State University of New York at Binghamton.
He joined KPMG LLP from the Internal Revenue Service Office of the Chief
Counsel, Corporate Division. In this position, he drafted treasury regulations,
private letter rulings, technical advice memoranda, closing agreements,
responses to congressional inquiries, field service advice, and memoranda of
law. Prior to his government experience, Mr. Liquerman was a senior tax associ-
ate in the mergers and acquisition group and the insurance group in the New
York office of Coopers & Lybrand.
He is a frequent speaker on bankruptcy and tax issues at various tax insti-
tutes and conferences around the country, including Tax Executives Institute,
Federal Bar Association, DC Bar Association, and the Association of Insolvency
and Restructuring Accountants. Mr. Liquerman is a member of the American
Bar Association, Section of Taxation.
Although Chapters 2, 5, 6, and 7 reflect the views of Robert Liquerman, they
do not necessarily reflect the views of KPMG, LLP.
n vi n
IMPORTANT NOTE
As we go to press, Congress is on the verge of passing new legislation that
will affect corporate bankruptcy. Please email Sheck Cho at John Wiley &
Sons (scho@wiley.com) to receive information about this new Act.
********************************************
Because of the rapidly changing nature of information in this field, this
product may be updated with annual supplements or with future editions.
Please phone 1-877-762-2974 or email us at subscriber@wiley.com to
receive any current update at no additional charge. We will send on
approval any future supplements or new editions when they become avail-
able. If you purchased this product directly from John Wiley & Sons, Inc.,
we have already recorded your subscription for this update service.
n vii n
Contents
Preface xi
Chapter One
Nature of Bankruptcy & Insolvency Proceedings 1
1.1 Objectives 1
1.2 Alternatives Available to a Financially Troubled Business 3
Chapter Two
Discharge of Indebtedness 21
2.1 Introduction 23
2.2 Discharge of Indebtedness Income 23
2.3 Determination of Discharge of Indebtedness Income 24
2.4 Section 108(e) Additions to Discharge of Indebtedness Income 35
2.5 Section 108(e) Subtractions from Discharge of Indebtedness Income 53
2.6 Discharge of Indebtedness Income Exclusions 57
2.7 Consequences of Qualifying for Section 108(A) Exclusions 66
2.8 Use of Property to Cancel Debt 85
2.9 Consolidated Tax Return Treatment 95
2.10 Discharge of Indebtedness Reporting Requirements 112
Chapter Three
Partnerships and S Corporations: Tax Impact
of Workouts and Bankruptcies 117
3.1 Introduction 118
3.2 Partnerships 118
3.3 S Corporations 140
Chapter Four
Taxation of Bankruptcy Estates and Debtors 151
4.1 Introduction 152
4.2 Responsibility for Filing Income Tax Returns 152
4.3 Accounting for the Bankruptcy Estate 156
4.4 Accounting for the Debtor (Individual) 203
4.5 Summary 214
Chapter Five
Corporate Reorganizations 217
5.1 Introduction 218
5.2 Elements Common to Many Reorganization Provisions 219
5.3 Overview of Specific Tax-Free Reorganizations Under Section 368 232
5.4 Acquisitive Reorganizations 232
Contents
n viii n
5.5 Stock Acquisitions 243
5.6 Single Entity Reorganizations 252
5.7 Divisive Reorganizations 257
5.8 Insolvency Reorganizations 268
5.9 Summary 281
Chapter Six
Use of Net Operating Losses 283
6.1 Introduction 284
6.2 I.R.C. Section 381 286
6.3 Restructuring Under Prior I.R.C. Section 382 291
6.4 Current I.R.C. Section 382 293
6.5 I.R.C. Section 383: Carryovers other than Net Operating Losses 346
6.6 I.R.C. Section 384 347
6.7 I.R.C. Section 269: Transactions to Evade or Avoid Tax 351
6.8 Libson Shops Doctrine 357
6.9 Consolidated Return Regulations 358
Chapter Seven
Other Corporate Issues 369
7.1 Introduction 370
7.2 Earnings and Profits 370
7.3 Incorporation 374
7.4 Liquidation 377
7.5 I.R.C. Section 338 381
7.6 Other Tax Considerations 394
7.7 Administrative Expenses 397
7.8 Other Administrative Issues 405
Chapter Eight
State and Local Taxes 409
8.1 Introduction 409
8.2 Income from Debt Discharge 410
8.3 Net Operating Loss Carryback and Carryover 413
8.4 Bankruptcy Estate 416
8.5 Responsibility for Filing Tax Returns 419
8.6 Stamp Tax 420
8.7 Summary 424
Chapter Nine
Tax Consequences to Creditors of Loss
from Debt Forgiveness 425
9.1 Introduction 426
9.2 Nature of Losses 426
9.3 Business and Nonbusiness Losses 428
9.4 Determination of Worthlessness 436
9.5 Secured Debt 445
[...]... The first edition of Bankruptcy and Insolvency Taxation was a revision of the authors’ Tax Planning for the Troubled Business, first published in 1983 and revised annually This edition, revising the second edition, will be updated annually or more frequently if needed because of tax law changes Bankruptcy and Insolvency Taxation is one of four books by the author and published by John Wiley & Sons dealing... four books by the author and published by John Wiley & Sons dealing with bankruptcy and insolvency taxation and accounting The others are Bankruptcy and Insolvency Accounting: Practice and Procedure, Bankruptcy and Insolvency Accounting: Forms and Exhibits, and Corporate Bankruptcy Chapter 1 describes the general provisions of the Bankruptcy Code applicable to debtors who have filed a chapter 7 or chapter... the bankruptcy court held that a section 6672 penalty assessed against the debtor for failure to pay the withholding taxes of Meridian Glass did count toward the debt limit The bankruptcy court held that the IRS’s disputed claim is includable in calculating the chapter 13 debt limits under section 109(e) of the Bankruptcy Code 4 5 Id 4.1 159 B.R 587 (Bankr D Idaho 1993) n 17 n Nature of Bankruptcy & Insolvency. .. was established at $12,300 The $12,300 value remains effective until April 1, 2007 n 7 n Nature of Bankruptcy & Insolvency Proceedings (ii) Priorities The 1978 Bankruptcy Code modified to a limited extent the order of payment of the expenses of administration and other unsecured claims Section 507 of the Bankruptcy Code provides for the following priorities: 1 Administrative expenses 2 In an involuntary... claims and interests The court may accept the voting that n 15 n Nature of Bankruptcy & Insolvency Proceedings was done prepetition provided that the solicitation of the acceptance (or rejection) was in compliance with applicable nonbankruptcy law governing the adequacy of disclosure in connection with the solicitation If no nonbankruptcy law is applicable, then the solicitation must have occurred after... reorganization or liquidation in a title 11 bankruptcy case This discussion is intended only to provide the reader with a basic introduction to n 2 n §1.2(a) Out-of-Court Settlements out-of-court and bankruptcy proceedings For a more detailed discussion of the legal aspects of and the accounting for out-of-court settlements and bankruptcy cases, see Newton’s Bankruptcy and Insolvency Accounting: Practice and... Booth and Mary Van Leuven, also in the Washington National Tax Practice of KPMG, LLP, in preparing this edition He also thanks his many other colleagues at KPMG, LLP, for their insights and contributions in preparing this book Robert Liquerman n xii n C H A P T E R O N E 1 Nature of Bankruptcy & Insolvency Proceedings § 1.1 Objectives (a) Introduction (b) Scope of Coverage § 1.2 Alternatives Available... out to the creditors that if legal action is taken, a petition in bankruptcy court will have to be filed.) • The informal composition settlement does not provide a method to resolve individual disputes between the debtor and the creditors • Executory contracts, especially leases, may be difficult to avoid n 5 n Nature of Bankruptcy & Insolvency Proceedings • Certain tax law provisions make it more advantageous... the right to file an involuntary bankruptcy court petition Proceedings brought in the federal courts are governed by the Bankruptcy Code Normally, it will be necessary to resort to such formality when suits have been filed against the debtor and its property is under garnishment or attachment or is threatened by foreclosure or eviction (c) Bankruptcy Court Proceedings Bankruptcy court proceedings are... business community in general Chapter 7 of the Bankruptcy Code covers the proceedings related to liquidation Another alternative under the Bankruptcy Code is to seek some type of relief so that the debtor will have enough time to work out agreements with creditors with the help of the bankruptcy court and be able to continue operations Chapters 11, 12, and 13 of the Bankruptcy Code provide for this type of . Bankruptcy &
Insolvency Taxation
Third Edition
Grant W. Newton
Robert Liquerman
JOHN WILEY & SONS, INC.
BANKRUPTCY &
INSOLVENCY TAXATION
Third. enquiry@wiley.com.sg
Email: brisbane@johnwiley.com.au
Bankruptcy &
Insolvency Taxation
Third Edition
Grant W. Newton
Robert Liquerman
JOHN WILEY & SONS, INC.
This book is
Ngày đăng: 19/02/2014, 08:20
Xem thêm: Tài liệu Bankruptcy & Insolvency Taxation Third Edition docx, Tài liệu Bankruptcy & Insolvency Taxation Third Edition docx, 4 SECTION 108(e) ADDITIONS TO DISCHARGE OF INDEBTEDNESS INCOME, 5 SECTION 108(e) SUBTRACTIONS FROM DISCHARGE OF INDEBTEDNESS INCOME