The National Association of Tax Professionals

The National Association of Tax Professionals

COD - After Insolvency

  • Topic(s): Federal Tax Law
  • Presenter(s): Lisa Ihm EA
  • Session#: 935-16
  • Session Length: 100 minutes
  • Program: NATP National Conference 2015
  • Date: Jul 20, 2015
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COD - After Insolvency - Details:

The taxpayer is insolvent and you know he or she won't have to pay tax on cancellation of debt (COD) income, but then what? In this session, learn how to use tax attributes rather than lose them, understand the reduction of tax attributes including basis, and find out how insolvency can save your client taxes for years to come. We'll cover how to enter information in your software, compute depreciation after a basis reduction, and apply the special recapture rules for when the asset is sold. This entire session focuses on the stuff that usually gets squeezed into the last few minutes of a seminar...the stuff you know you don't really understand.

Upon completion of the session, you will be able to:
  1. Identify which tax attributes must be reduced based on which COD exclusion is used.
  2. Identify whether basis must be reduced as part of attribute reduction.
  3. Calculate depreciation after a basis reduction
  4. Correctly report a sale of property that was subject to basis reduction.