Cancellation of debt income insolvency exclusion

Note: Register for this month’s CLE, “Current Developments in Tax Law,” from 1-2 p.m. ET on Wednesday, Nov. 18.Despite recent murmurs that the recession may be easing its grip on the United States, debt continues to sap the financial strength of millions of families and businesses around the country.Home foreclosure is one of debt’s most wrenching symptoms. In August, according to RealtyTrac, foreclosure filings were reported on 358,471 properties. That number amounts to one of every 357 housing units in the country.There was a smidge of good news. Filings were down 1 percent from July. Still, there were 18 percent more than in August 2008.Meanwhile, August consumer bankruptcy filings totaled 119,874, an increase of 24 percent over the number of filings in August 2008,according to the American Bankruptcy Institute, a nonpartisan organization that analyzes issues relating to insolvency. Here, too, there was a little bit of good news: The number of bankruptcy … [Read more...] about The Bad-Debt Blues

Can a foreign person exclude foreign-situs assets in determining insolvency exception to cancellation of indebtedness income?With the worldwide global default rate on corporate debt continuing to rise, a taxpayer’s ability to exclude cancellation of indebtedness income from gross income has become increasingly relevant.  This remains true for foreign persons who are also subject to U.S. federal income tax on U.S.-source COD income.Section 61(a)(12) of the Internal Revenue Code (the “Code”) requires a taxpayer to include in gross income “[i]ncome from discharge of indebtedness” (otherwise known as cancellation of indebtedness income or “COD income.”)  This provision codifies the decision in Kirby Lumber Co.,284 US 1, 76 L Ed 131, 2 USTC ¶814 (1931), in which the U.S. Supreme Court held that a corporation realized COD income when it purchased in the open market its bonds, which were issued at par, for an amount less … [Read more...] about Determining Foreigners Insolvency Exception

1. The Negotiable Instruments (Amendment) Act, 2015The Act amends the Negotiable Instruments Act, 1881 and replaces the Negotiable Instruments (Amendment) Ordinance, 2015 which was promulgated on June 15, 2015. It stipulates that in case of a cheque being dishonored: If the cheque is delivered for collection to the account of the payee (person who receives the cheque), the jurisdiction lies in the area of the bank branch where the payee maintains an account, or If the payee presents a cheque to a bank in any other way, the jurisdiction lies in the area of the bank branch where the drawer (person who writes the cheque) maintains an account. (Section 142(2))It further provides that if the payee has filed a complaint against the drawer in a court with appropriate jurisdiction, all subsequent complaints against that person regarding cheque bouncing will be filed in the same court, irrespective of whether the cheque was delivered for collection or presented at a bank within … [Read more...] about Laws Enacted in 2015: A Snapshot

By: Ashok Kini 11 May 2019 8:33 AM GMT One Sided Clauses In Builder-Buyer Agreements Is An Unfair Trade Practice Pioneer Urban Land & Infrastructure Ltd. V. Govindan Raghavan The Supreme Court held that the incorporation of one-sided clauses in a builder-buyer agreement constitutes an unfair trade practice as per Section 2 (r) of the Consumer Protection Act, 1986. The bench comprising Justice UU Lalit and Justice Indu Malhotra also observed that a builder could not seek to bind a flat buyer with one-sided contractual terms.Employee Not Entitled To Full Back Wages On Acquittal, Unless His Prosecution Was Found Malicious Raj Narain V. Union of India The Supreme Court held that the employer cannot be mulcted with full back wages on the acquittal of an employee by a criminal Court, unless it is found that the prosecution is malicious.SC Strikes Down RBI Circular Asking Banks To Take Defaulting Companies To Insolvency Dharani Sugars … [Read more...] about Supreme Court Monthly Digest- April

By: Ashok Kini 11 May 2019 8:33 AM GMT One Sided Clauses In Builder-Buyer Agreements Is An Unfair Trade Practice Pioneer Urban Land & Infrastructure Ltd. V. Govindan Raghavan The Supreme Court held that the incorporation of one-sided clauses in a builder-buyer agreement constitutes an unfair trade practice as per Section 2 (r) of the Consumer Protection Act, 1986. The bench comprising Justice UU Lalit and Justice Indu Malhotra also observed that a builder could not seek to bind a flat buyer with one-sided contractual terms.Employee Not Entitled To Full Back Wages On Acquittal, Unless His Prosecution Was Found Malicious Raj Narain V. Union of India The Supreme Court held that the employer cannot be mulcted with full back wages on the acquittal of an employee by a criminal Court, unless it is found that the prosecution is malicious.SC Strikes Down RBI Circular Asking Banks To Take Defaulting Companies To Insolvency Dharani Sugars … [Read more...] about Supreme Court Monthly Digest- April 2019