New Tax Deferral Election May Lead to Investor Disputes During Loan Workouts

Brian A. Smith and William E. Russell are the authors of “New Tax Deferral Election May Lead to Investor Disputes During Loan Workouts,” which is featured in the August issue of Financier Worldwide magazine, a leading source of global financial insight and analysis. 

This article examines debt workouts and restructurings, focusing on the significant hurdle of structuring a suitable arrangement between a lender and a borrower, which generally involves the negative impact of US income taxes on the borrower. 

Subsequent to the publication of the article in Financier Worldwide, the Internal Revenue Service issued Revenue Procedure 2009-37, which answers some questions raised in the article but causes even more concerns.  Mr. Smith and Mr. Russell have identified these concerns in a new article entitled “With Great Power Comes Great Responsibility - Deferring Cancellation of Debt Income For Tax Partnerships.”

Mr. Smith is Partner with Freeborn & Peters’ Business Law Practice Group, with a background and focus in the tax aspects of business transactions. He is a trusted advisor to both domestic and international clients providing them with management-level counsel on a broad range of decisions and transactions, including structuring new businesses, joint ventures, reorganizations, mergers and acquisitions. 

As a Partner in the firm’s Business Law Practice Group, Mr. Russell advises closely-held businesses and professionals on business and tax matters. His practice consists of (i) real estate development structure and investment, (ii) corporate transactions and business consulting, and (iii) advanced estate planning and probate.