- NY Credits : 2.0
- TX Credits : 2.0
- IRS Enrolled Agent Credits : Federal Tax/Tax Related Matters - 2.0
- IRS Non-Credentialed Return Preparer Credits : Federal Tax - 2.0
Cancellation of Debt Income
The federal tax code imposes an income tax on all income, from whatever source derived. This explicitly includes debt forgiveness. This course explores the reasons that cancellation of debt is included in income and describes the various exclusions from recognizing such income for tax purposes. The specific consequences of excluding cancellation of debt income are described, as well as the special rules related to debt forgiveness in the context of S corporations and partnerships. Finally, this course identifies the reporting obligations that arise from the cancellation of debt.
This course is most beneficial to professionals new to debt cancellation who may be at the staff or entry level in organization but also for a seasoned professional with limited exposure to this subject.
Upon successful completion of this course, the user should be able to:
recognize the reasons debt forgiveness is included in income,
determine situations in which cancellation of debt income is excluded from gross income,
distinguish the insolvency exception from the bankruptcy exception,
calculate the assets and liabilities of a debtor for purposes of the insolvency exception,
recognize the types of debt forgiveness that do not give rise to income,
determine the proper order for tax attribute reduction,
indicate how the alternative minimum tax interacts with cancellation of debt income,
distinguish the application of debt forgiveness rules to S corporations and partnerships, and
identify the reporting requirements applicable to cancellation of debt.