extent that the payment of the liability would have given rise to a deduction . I.R.C. § 108(e)(4) Acquisition of outstanding debt by a person bearing a relationship (e.g. family members, entities under common control; See §§ 267(b), 707(b)(1)) shall be treated as acquisition of debt by the debtor. I.R.C. § 108(e)(5) Purchase money debt reduction for solvent debtor treated as price reduction. o Applies to ANY purchase money price reduction. I.R.C. § 108(b)(1) Certain tax attributes of the taxpayer-debtor are required to be reduced. I.R.C. § 108(b)(2) Includes taxpayer’s basis in property (§ 108(b)(2)(E)) See textbook p. 173 and § 1017 I.R.C. § 1017(a) If an amount is excluded from GI under § 108, then any portion of such amount is to be applied to reduce basis. o Basis in property-Amt. excluded=reduced basis o Reduction in basis should be applied to any property held by the taxpayer at the beginning of the taxable year following the taxable year in which the discharge occurs. Reg. § 1.61-12(a) A farmer who operates a farm for profit is entitled to deduct from gross income as necessary expenses all amounts actually expended in the carrying on the business of farming. Gehl v. Commissioner:
Reg. § 1.1001-2(a)(1)-(4)(iii) AR from sale or other disposition of property includes the amount of liabilities form which the transferor is discharged as a result of the sale or disposition o (2) AR on sale or disposition of property that secures a recourse liability does not include amounts that are (or will be if realized and recognized) income from the discharge of indebtedness under § 61(a)(12) Where amounts arising from discharge are not realized or recognized see § 108 o (3) Liability incurred on acquisition does not apply to the extent hat such liability was not taking into account in determining the transferor’s basis for such property. (4) (i)For purposes of this section, the sale or disposition of property that
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- Summer '19
- Taxation in the United States