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Tax Law Roundup current law developments in U.S. taxation

Tag Archives: cancellation of debt

Final Regulations Address Partnership Debt-For-Equity Transactions

Posted in General, Joint Venture, Partnership/LLC, Workouts

Today the IRS issued final regulations under section 108(e)(8) to clarify the mechanics of loan workouts when a lender contributes its loan in exchange for equity in the borrower-partnership.  In 2004, Congress extended this historical corporate rule to partnerships, providing that the partnership is required to recognize cancelation of debt (COD) income to the extent… Continue Reading