Income From Debt Relief


R

rtd21

A partnership has $1 million in unpaid trade accounts payable and no
assets, with judgements against it by the vendors for the $1 million
of trade ap. The partnership is winding up and preparing its final
Form1065.

When the partnership reports the $1 million of income out to its
partners on final K-1s, are there cases where the income can be
reported as a type of income the partner can get out of reporting as
taxable, by inciting the "insolvent outside of bankruptcy" exception
to recognizing income from debt relief?
 
Ad

Advertisements


Ask a Question

Want to reply to this thread or ask your own question?

You'll need to choose a username for the site, which only take a couple of moments. After that, you can post your question and our members will help you out.

Ask a Question

Top