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Unformatted text preview: However, he does have basis in the ambulances that may need to be reduced under section 1017. However, 1017(b)(2) limits the basis reduction the basis is not to be reduced below the amount of the liabilities. Since the liabilities here, even after the discharge, still exceed the basis, no basis reduction is required. Homework Chapter 8 Problem 3d: Same answer as 3c except that the NOL carryover will be reduced to zero. Additionally, no basis reduction to the assets; however Businessman, under section 108(b)(5) could elect to reduce the basis in the assets instead of reducing the NOL. Could be favorable depending upon timing of next expected taxable income and the lives of the depreciable assets. Problem 3e: Debt discharge can be excluded only up to the amount of the insolvency, or $25,000. The remaining $15,000 will be includible in gross income....
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- Spring '08