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Category Archives: Workouts

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Is It the End or Just the Beginning: Planning with the Final Partnership Debt-for-Equity Regulations

Posted on By Steven R. Schneider Posted in Partnership/LLC, Workouts

 For years taxpayers had argued that a “partnership debt-for-equity” exception to cancellation of debt (COD) income lurked in the far corners of the tax rules. That argument was abruptly taken off the table on October 22, 2004 when Congress added partnerships to the scope of § 108(e)(8), confirming that partnerships have COD income when using… Continue Reading

Final Regulations Address Partnership Debt-For-Equity Transactions

Posted on By Steven R. Schneider 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