The National Association of Tax Professionals

The National Association of Tax Professionals

COD and Insolvency

  • Topic(s): Individual
  • Presenter(s): Jaye E. Tritz
  • Session#: 915-13
  • Session Length: 100 minutes
  • Program: NATP 2015 Tax Forums & Expo
  • Date: Aug 26, 2015
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COD and Insolvency - Details:

Generally when taxpayers are in financial distress, their property is foreclosed upon and any debt associated with that property could be cancelled. If the debt is cancelled, taxpayers have taxable income to report unless they meet one of the exceptions. One exception for excluding debt is insolvency. The calculation used to determine if a taxpayer is insolvent can be complex and cumbersome. This session examines the calculation of insolvency and the reduction of tax attributes associated with excluding cancelled debt due to insolvency.

Upon completion of the session, you will be able to:
  1. Determine whether or not an individual taxpayer is insolvent.
  2. Determine the FMV of assets that a taxpayer owns, including the obscure assets.
  3. Identify the effects of pass-through entities and whether an insolvency calculation must be done at the individual or entity level.
  4. List the ordering rules for reducing tax attributes.