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Deferring Cancellation of Indebtedness Income Could Leave Taxpayers in a Worse Position, Warn Experts

NEWS RELEASE

Contacts:
Mark Carrington
(703) 341.5880
mcarrington@bna.com

Arlington, Va. (August 28, 2009) – The American Recovery and Reinvestment Act of 2009 (ARRA), enacted Feb. 17, 2009, provides taxpayers with an election to defer recognition of cancellation of indebtedness income (CODI) on debt instruments reacquired by the debtor or a related party in 2009 or 2010. “While this provision offers taxpayers an opportunity to restructure capital and clean up their debt, it could raise tax liabilities for distressed companies operating in states that choose to decouple from it,” says Steven N.J. Wlodychak, a partner with Ernst & Young, LLP, Los Angeles, CA.

Wlodychak, accompanied by fellow tax authority Scott Gilefsky of the same firm, will share their expertise in State Treatment of Cancellation of Indebtedness Income (CODI): Why Electing to Defer CODI Can Leave Some Taxpayers in a Worse Position, a BNA webinar on September 17 at 12:30 pm.

This presentation focuses on the state tax issues that could potentially arise for taxpayers seeking relief under I.R.C. Section 108(i). It identifies the states that have conformed to or decoupled from the federal provision and considers issues—such as the apportionment or allocation of CODI—that most state taxing jurisdictions have not yet addressed. 

What Will Be Covered

In 90 minutes, participants will understand:

• The election to defer cancellation of indebtedness income (CODI) under I.R.C. Section 108(i)
• Which states have adopted the provision or have decoupled from it
• The various approaches the states have used to decouple from the provision
• The state income tax implications for financially distressed companies operating in states that have decoupled from the provision
• State income tax issues likely to arise for taxpayers seeking relief under Section 108(i), such as whether CODI constitutes business on nonbusiness income
• The interplay between I.R.C. Section 108(i) and state net operating loss provisions

And learn how to:

• Understand the CODI provision under I.R.C. Section 108(i)
• Identify the state income tax issues that could potentially arise for taxpayers seeking relief under the provision
• Explain the pitfalls that could potentially await taxpayers in states that have not adopted or chosen not to adopt I.R.C. Section 108(i)
• Recognize those states that have adopted I.R.C. Section 108(i) or have decoupled from it
• Understand the methods by which states have decoupled from I.R.C. Section 108(i)  and the implications for taxpayers
• Identify key issues that most states have not yet addressed, such as the allocation or apportionment of CODI

To register for this webinar and obtain further information about CLE and CPE credits, go to: http://tmstore.bna.com/Pagemanager.aspx?pageId=8633 or call 1-800-372-1033, menu Option 6, then Option 1. The fee is $249 for BNA subscribers, $299 for nonsubscribers.

To receive automatic, email notification of upcoming BNA webinars that may be of interest to you, go to: http://www.bna.com/emailsignup.htm

About BNA Tax & Accounting Webinars
Designed for today's busy practitioners, our webinars offer the same expertise and relevance that are the hallmark of all BNA Tax & Accounting resources. In just 60-90 minutes, practitioners gain in-depth knowledge on a current tax or accounting topic from experts in that area -- and benefit from practical applications that can be put to work immediately. Conference attendees have the opportunity to ask the speakers questions, and may be eligible to earn CLE or CPE credits - all from the convenience of their own office or conference room.

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