Cancellation of Debt (COD) Income

Cancellation of Debttaxable income
Taxpayers in the United States may have tax consequences when debt is cancelled.wikipedia
23 Related Articles

Tax Cuts and Jobs Act of 2017

Tax Cuts and Jobs Act2017 Republican tax planRepublican tax legislation
The act exempts the discharge of certain student loans due to the death or total permanent disability of the borrower from taxable income.

Student loans in the United States

student loansstudent loanfederal student loans
Effective with discharges on or after January 1, 2018, debt discharged due to the death or total permanent disability of the borrower is no longer treated as taxable income.

United States

AmericanU.S.USA
Taxpayers in the United States may have tax consequences when debt is cancelled.

Internal Revenue Code

Internal Revenue Code of 1986U.S. tax codeInternal Revenue Code of 1954
According to the Internal Revenue Code, the discharge of indebtedness must be included in a taxpayer's gross income.

Gross income

gross profitgrossgrossed
According to the Internal Revenue Code, the discharge of indebtedness must be included in a taxpayer's gross income.

Income

incomesearningsearning power
The standard definition of income is found in a United States Supreme Court case entitled Commissioner v. Glenshaw Glass Co. The Court defined income as 1) accession to wealth; 2) that is clearly realized; and 3) over which the taxpayer has complete dominion.

Supreme Court of the United States

United States Supreme CourtU.S. Supreme CourtSupreme Court
The standard definition of income is found in a United States Supreme Court case entitled Commissioner v. Glenshaw Glass Co. The Court defined income as 1) accession to wealth; 2) that is clearly realized; and 3) over which the taxpayer has complete dominion.

Commissioner v. Glenshaw Glass Co.

Commissioner of Internal Revenue v. Glenshaw Glass Co.
The standard definition of income is found in a United States Supreme Court case entitled Commissioner v. Glenshaw Glass Co. The Court defined income as 1) accession to wealth; 2) that is clearly realized; and 3) over which the taxpayer has complete dominion.

Recourse debt

recourseLimited Recourse Obligation
Whether secured debt is recourse or nonrecourse can have significant consequences if the debt is settled in foreclosure of the secured property.

Nonrecourse debt

non-recoursenonrecoursenon-recourse debt
Whether secured debt is recourse or nonrecourse can have significant consequences if the debt is settled in foreclosure of the secured property.

Commissioner v. Tufts

The case of Commissioner v. Tufts holds that in such a situation, the amount realized is the amount of the debt, and the fair market value of the property is irrelevant.

United States Court of Appeals for the Third Circuit

Third Circuit Court of Appeals3d Cir.U.S. Court of Appeals for the Third Circuit
This doctrine can be found in a Third Circuit Court of Appeals case, Zarin v. Commissioner.

Bankruptcy in the United States

bankruptcybankruptBankruptcy Code
A Title 11 case is one that falls under Title 11 of the United States Code (relating to bankruptcy).

Insolvency

insolventcorporate insolvencyinsolvency law
A taxpayer is insolvent when their total liabilities exceed the fair market value of assets.

United States Department of Education

U.S. Department of EducationUS Department of EducationDepartment of Education
Prior to the enaction of the Tax Cuts and Jobs Act of 2017, there were several lobbying efforts to amend 108(f)(1) for those who get total and permanent disability discharges, since under Department of Education rules, such borrowers are subject to a three-year post-discharge review period during which their incomes from employment cannot exceed the poverty line.

United States Code

U.S.C.U.S. Codefederal statute
A Title 11 case is one that falls under Title 11 of the United States Code (relating to bankruptcy).

Tax attribute

There are additional rules as well regarding the total amount excludable, which cannot exceed the sum of tax attributes and business and investment assets.

United States Congress

CongressU.S. CongressCongressional
To remedy this situation, Congress passed 26 U.S.C. § 108(e)(5), also known as the purchase price adjustment.

Purchase price adjustment

To remedy this situation, Congress passed 26 U.S.C. § 108(e)(5), also known as the purchase price adjustment.

Loan

Loansconsumer loanslending
For a more detailed description of the "discharge of indebtedness", look at Section 108 (Cancellation of Debt (COD) Income) of the Internal Revenue Code.'''