Brian Smith and William Russell, Partners in the Firm’s Corporate Practice Group, authored, “With Great Power Comes Great Responsibility: Deferring Cancellation Debt Income for Tax Partnerships,” a Freeborn & Peters White Paper.
About This White Paper:
Income gained through the Cancellation of Indebtedness or (COI) can create great challenges for partners in ventures that are going through workouts and restructurings, particularly if the partners have conflicting objectives in terms of their tax position. This whitepaper considers the various options available to partners when making elections to recognize COI income immediately or to defer it. It also describes the perils that might befall general partners who fail to consider the potential impact of these elections on their partners’ financial situation.