Source: https://www.law.cornell.edu/uscode/text/26/108
Timestamp: 2019-04-26 16:19:17+00:00

Document:
The reductions described in subparagraphs (B), (C), and (G) shall be 33⅓ cents for each dollar excluded by subsection (a). The reduction described in subparagraph (F) in any passive activity credit carryover shall be 33⅓ cents for each dollar excluded by subsection (a).
with respect to which such taxpayer makes an election to have this paragraph apply.
For purposes of this section, the term “title 11 case” means a case under title 11 of the United States Code (relating to bankruptcy), but only if the taxpayer is under the jurisdiction of the court in such case and the discharge of indebtedness is granted by the court or is pursuant to a plan approved by the court.
For purposes of this section, the term “insolvent” means the excess of liabilities over the fair market value of assets. With respect to any discharge, whether or not the taxpayer is insolvent, and the amount by which the taxpayer is insolvent, shall be determined on the basis of the taxpayer’s assets and liabilities immediately before the discharge.
For purposes of subsection (e)(6), a shareholder’s adjusted basis in indebtedness of an S corporation shall be determined without regard to any adjustments made under section 1367(b)(2).
An election under paragraph (5) of subsection (b) or under paragraph (3)(C) of subsection (c) shall be made on the taxpayer’s return for the taxable year in which the discharge occurs or at such other time as may be permitted in regulations prescribed by the Secretary.
For purposes of this paragraph, sections 267(b) and 707(b)(1) shall be applied as if section 267(c)(4) provided that the family of an individual consists of the individual’s spouse, the individual’s children, grandchildren, and parents, and any spouse of the individual’s children or grandchildren.
such corporation shall be treated as having satisfied the indebtedness with an amount of money equal to the shareholder’s adjusted basis in the indebtedness.
The amount determined under clause (ii) shall be reduced by the amount (if any) included in the creditor’s gross income on the exchange.
In the case of any creditor who computes his taxable income under the cash receipts and disbursements method, proper adjustment shall be made in the amount taken into account under clause (ii) of subparagraph (A) for any amount which was not included in the creditor’s gross income but which would have been included in such gross income if such indebtedness had been satisfied in full.
For purposes of this paragraph, the term “debtor corporation” includes a successor corporation.
a private education loan (as defined in section 140(7)  of the Consumer Credit Protection Act (15 U.S.C. 1650(7)  )).
For purposes of subparagraph (A), the term “adjusted tax attributes” means the sum of the tax attributes described in subparagraphs (A), (B), (C), (D), (F), and (G) of subsection (b)(2) determined by taking into account $3 for each $1 of the attributes described in subparagraphs (B), (C), and (G) of subsection (b)(2) and the attribute described in subparagraph (F) of subsection (b)(2) to the extent attributable to any passive activity credit carryover.
In the case of a partnership, any income deferred under this subsection shall be allocated to the partners in the partnership immediately before the discharge in the manner such amounts would have been included in the distributive shares of such partners under section 704 if such income were recognized at such time. Any decrease in a partner’s share of partnership liabilities as a result of such discharge shall not be taken into account for purposes of section 752 at the time of the discharge to the extent it would cause the partner to recognize gain under section 731. Any decrease in partnership liabilities deferred under the preceding sentence shall be taken into account by such partner at the same time, and to the extent remaining in the same amount, as income deferred under this subsection is recognized.
The Higher Education Act of 1965, referred to in subsec. (f)(5)(A)(i), (ii), is Pub. L. 89–329, Nov. 8, 1965, 79 Stat. 1219. Part D of title IV of the Act is classified generally to part D (§ 1087a et seq.) of subchapter IV of chapter 28 of Title 20, Education. Sections 437 and 464(c)(1)(F) of the Act are classified to sections 1087 and 1087dd(c)(1)(F), respectively, of Title 20. For complete classification of this Act to the Code, see section 1 of Pub. L. 89–329, set out as a Short Title note under section 1001 of Title 20 and Tables.
2018—Subsec. (a)(1)(E). Pub. L. 115–123 substituted “January 1, 2018” for “January 1, 2017” in two places.
2015—Subsec. (a)(1)(E). Pub. L. 114–113, § 151(b), substituted “discharged—” for “discharged before January 1, 2017.” and added cls. (i) and (ii).
Pub. L. 114–113, § 151(a), substituted “January 1, 2017” for “January 1, 2015”.
2014—Subsec. (a)(1)(E). Pub. L. 113–295 substituted “January 1, 2015” for “January 1, 2014”.
2013—Subsec. (a)(1)(E). Pub. L. 112–240 substituted “January 1, 2014” for “January 1, 2013”.
2008—Subsec. (a)(1)(E). Pub. L. 110–343 substituted “January 1, 2013” for “January 1, 2010”.
2007—Subsec. (a)(1)(E). Pub. L. 110–142, § 2(a), added subpar. (E).
Subsec. (a)(2)(A). Pub. L. 110–142, § 2(c)(1), substituted “(D), and (E)” for “and (D)”.
Subsec. (a)(2)(C). Pub. L. 110–142, § 2(c)(2), added subpar. (C).
Subsec. (h). Pub. L. 110–142, § 2(b), added subsec. (h).
Subsec. (f)(4). Pub. L. 108–357, § 320(a), added par. (4).
2002—Subsec. (d)(7)(A). Pub. L. 107–147 inserted “, including by not taking into account under section 1366(a) any amount excluded under subsection (a) of this section” before period at end.
Subsec. (f)(3). Pub. L. 105–206, § 6004(f)(2), struck out “(or by an organization described in paragraph (2)(E) from funds provided by an organization described in paragraph (2)(D))” after “paragraph (2)(D)”.
Subsec. (f)(2)(B). Pub. L. 105–34, § 225(a)(1), struck out “or” at end.
Subsec. (f)(3). Pub. L. 105–34, § 225(a)(2), added par. (3).
1996—Subsec. (d)(9)(A). Pub. L. 104–188 substituted “paragraph (3)(C)” for “paragraph (3)(B)”.
1993—Subsec. (a)(1)(D). Pub. L. 103–66, § 13150(a), added subpar. (D).
Subsec. (a)(2)(A). Pub. L. 103–66, § 13150(c)(1), substituted “, (C), and (D)” for “and (C)”.
Subsec. (b)(2)(C) to (E). Pub. L. 103–66, § 13226(b)(1), added subpar. (C) and redesignated former subpars. (C) and (D) as (D) and (E), respectively. Former subpar. (E) redesignated (F).
Subsec. (b)(2)(F). Pub. L. 103–66, § 13226(b)(2), added subpar. (F). Former subpar. (F) redesignated (G).
Pub. L. 103–66, § 13226(b)(1), redesignated subpar. (E) as (F).
Subsec. (b)(2)(G). Pub. L. 103–66, § 13226(b)(2), redesignated subpar. (F) as (G).
Subsec. (b)(4)(B). Pub. L. 103–66, § 13226(b)(3)(B), substituted “(D)” for “(C)” in heading and text.
Subsec. (b)(4)(C). Pub. L. 103–66, § 13226(b)(3)(C), substituted “(G)” for “(E)” in heading and text.
Subsec. (c). Pub. L. 103–66, § 13150(b), added subsec. (c).
Subsec. (d). Pub. L. 103–66, § 13150(c)(3)(B), substituted “certain provisions” for “subsections (a), (b) and (g)” in heading.
Subsec. (d)(6), (7)(A). Pub. L. 103–66, § 13150(c)(3)(A), (C), substituted “Certain provisions” for “Subsections (a), (b) and (g)” in heading and “subsections (a), (b), (c), and (g)” for “subsections (a), (b), and (g)” in text.
Subsec. (d)(9)(A). Pub. L. 103–66, § 13150(c)(5), inserted “or under paragraph (3)(B) of subsection (c)” after “subsection (b)”.
Subsec. (e)(6). Pub. L. 103–66, § 13226(a)(2)(B), substituted “Except as provided in regulations, for” for “For”.
Subsec. (e)(10), (11). Pub. L. 103–66, § 13226(a)(1)(A), redesignated par. (11) as (10) and struck out former par. (10) which related to satisfaction of indebtedness by transfer of corporation’s stock.
Subsec. (g)(3)(B). Pub. L. 103–66, § 13226(b)(3)(D), substituted “subparagraphs (A), (B), (C), (D), (F), and (G)” for “subparagraphs (A), (B), (C), and (E)” and “subparagraphs (B), (C), and (G)” for “subparagraphs (B) and (E)” and inserted before period at end “and the attribute described in subparagraph (F) of subsection (b)(2) to the extent attributable to any passive activity credit carryover”.
1990—Subsec. (e)(8). Pub. L. 101–508, § 11325(b)(2), inserted provision at end that any stock which is a disqualified stock, as so defined, not be treated as stock for purposes of this paragraph.
Subsec. (e)(11). Pub. L. 101–508, § 11325(a)(1), added par. (11).
Subsec. (g)(1)(B). Pub. L. 101–508, § 11813(b)(6), substituted “section 49(a)(1)(D)(iv)” for “section 46(c)(8)(D)(iv)”.
1988—Subsec. (a)(1)(C). Pub. L. 100–647, § 1004(a)(1), added subpar. (C).
Subsec. (b). Pub. L. 100–647, § 1004(a)(3), struck out “in title 11 case or insolvency” after “Reduction of tax attributes” in heading and substituted “subparagraph (A), (B), or (C)” for “subparagraph (A) or (B)” in text of par. (1).
Subsec. (d). Pub. L. 100–647, § 1004(a)(6)(B), which directed amendment of subsec. (d) heading by substituting “subsections (a), (b), and (g)” for “subsections (a), and (b)”, was executed by making the substitution for “subsections (a) and (b)” as the probable intent of Congress.
Subsec. (d)(6). Pub. L. 100–647, § 1004(a)(6)(A), (C), substituted “Subsections (a), (b), and (g)” for “Subsections (a) and (b)” in heading and “subsections (a), (b), and (g)” for “subsections (a) and (b)” in text.
Subsec. (d)(7)(A). Pub. L. 100–647, § 1004(a)(6)(A), (C), substituted “Subsections (a), (b), and (g)” for “Subsections (a) and (b)” in heading and “subsections (a), (b), and (g)” for “subsections (a) and (b)” in text.
“(1) In general.—For purposes of this section and section 1017, the discharge by a qualified person of qualified farm indebtedness of a taxpayer who is not insolvent at the time of the discharge shall be treated in the same manner as if the discharge had occurred when the taxpayer was insolvent.
“(B) 50 percent or more of the average annual gross receipts of the taxpayer for the 3 taxable years preceding the taxable year in which the discharge of such indebtedness occurs is attributable to the trade or business of farming.
1986—Subsec. (a)(1)(C). Pub. L. 99–514, § 822(a), struck out subpar. (C) relating to exclusion from gross income if the indebtedness discharged is qualified business indebtedness.
Subsec. (a)(2). Pub. L. 99–514, § 822(b)(1), substituted “Subparagraph (B) of paragraph (1)” for “Subparagraphs (B) and (C) of paragraph (1)” in subpar. (A), struck out subpar. (A) designation and heading, and struck out subpar. (B) providing that insolvency exclusion takes precedence over qualified business exclusion.
“(ii) section 38 (relating to general business credit).
Pub. L. 99–514, § 1171(b)(4), struck out last sentence which had been eliminated by the general amendment of subpar. (B) by Pub. L. 99–514, § 231(d)(3)(D). See above.
Subsec. (b)(2)(E). Pub. L. 99–514, § 1847(b)(7), substituted “section 27” for “section 33”.
Subsec. (b)(3). Pub. L. 99–514, § 104(b)(2), substituted “33⅓ cents” for “50 cents”.
Subsec. (c). Pub. L. 99–514, § 822(b)(2), struck out subsec. (c) relating to tax treatment of discharge of qualified business indebtedness.
Subsec. (d). Pub. L. 99–514, § 822(b)(3)(B), struck out reference to subsec. (c) in heading.
Subsec. (d)(4). Pub. L. 99–514, § 822(b)(3)(A), struck out par. (4) relating to treatment of indebtedness as qualified business indebtedness.
Subsec. (d)(6), (7)(A). Pub. L. 99–514, § 822(b)(3)(B), struck out reference to subsec. (c) in heading and text.
Subsec. (d)(9)(A). Pub. L. 99–514, § 822(b)(3)(D), struck out “under paragraph (4) of this subsection or” after “An election”.
Subsec. (e)(7)(A)(ii)(I). Pub. L. 99–514, § 805(c)(2), substituted “subsection (a) or (b) of section 166” for “subsection (a), (b), or (c) of section 166”.
Subsec. (e)(7)(B) to (D). Pub. L. 99–514, § 805(c)(3), redesignated subpars. (C) to (E) as (B) to (D), respectively, and struck out former subpar. (B) which related to taxpayers on reserve method.
Subsec. (e)(7)(E), (F). Pub. L. 99–514, § 805(c)(3), (4), redesignated subpar. (F) as (E) and substituted “the foregoing subparagraphs” for “subparagraphs (A), (B), (C), (D), and (E)”. Former subpar. (E) redesignated (D).
Subsec. (e)(10)(C). Pub. L. 99–514, § 621(e), repealed the amendment by Pub. L. 98–369, § 59(b)(1), which had added subpar. (C) creating an exception for transfers in certain workouts of the satisfaction of indebtedness by corporation’s stock. See 1984 Amendment note below.
Subsec. (g). Pub. L. 99–514, § 405(a), added subsec. (g).
1984—Subsec. (b)(2)(B). Pub. L. 98–369, § 474(r)(5), substituted provisions relating to research credits and general business credits covering carryovers to or from the taxable year of a discharge of an amount for purposes of determining the amount allowable as a credit under section 30 (relating to credit for increasing research activities), or section 38 (relating to general business credit), and directing that there shall not be taken into account any portion of a carryover which is attributable to the employee stock ownership credit determined under section 41 for former provisions covering carryovers to or from the taxable year of the discharge of an amount for purposes of determining the amount of a credit allowable under section 38 (relating to investment in certain depreciable property), section 40 (relating to expenses of work incentive programs), section 44B (relating to credit for employment of certain new employees), section 44E (relating to alcohol used as a fuel), or section 44F (relating to credit for increasing research activities), and directing that, for purposes of clause (i), there could not be taken into account any portion of a carryover which was attributable to the employee plan credit (within the meaning of section 48(o)(3)).
Subsec. (d)(6). Pub. L. 98–369, § 721(b)(2), struck out “or S corporation shareholder level” in heading and second sentence which provided that “In the case of an S corporation, subsections (a), (b), and (c) shall apply at the shareholder level.”. See par. (7)(A).
Subsec. (d)(7) to (10). Pub. L. 98–369, § 721(b)(2), added par. (7) and redesignated former pars. (7) to (9) as (8) to (10), respectively.
Subsec. (e)(10). Pub. L. 98–369, § 59(a), added par. (10).
Subsec. (e)(10)(C). Pub. L. 98–369, § 59(b)(1), which added subpar. (C), effective as if included in the amendments made by section 806(e) and (f) of Pub. L. 94–455, was repealed by Pub. L. 99–514, § 621(e), (f)(2), eff. Jan. 1, 1986, with certain exceptions, see Effective Date of 1986 Amendment note below.
Subsec. (f). Pub. L. 98–369, § 1076(a), added subsec. (f).
1983—Subsec. (b)(2)(B)(v). Pub. L. 97–448, § 102(h)(1), added cl. (v).
Subsec. (e)(7)(A)(iii). Pub. L. 97–448, § 304(d), added cl. (iii).
1976—Pub. L. 94–455, § 1951(b)(2)(A), struck out “(a) Special rule of exclusion.—” after “Income from discharge of indebtedness” and struck out subsec. (b) which related to discharge, cancellation, or modification of indebtedness of certain railroad corporations.
1956—Subsec. (b). Act June 29, 1956, substituted “December 31, 1957” for “December 31, 1955”.
The amendment made by subsection (a) [amending this section] shall apply to discharges of indebtedness after December 31, 2014.
Except as provided in paragraph (2), the amendment made by this section [amending this section] shall apply to discharges of indebtedness after October 11, 2001, in taxable years ending after such date.
Amendment by Pub. L. 104–188 effective as if included in the provision of the Revenue Reconciliation Act of 1993, Pub. L. 103–66, §§ 13001–13444, to which such amendment relates, see section 1703(o) of Pub. L. 104–188, set out as a note under section 39 of this title.
Except as otherwise provided in this paragraph, the amendments made by this subsection [amending this section and section 382 of this title] shall apply to stock transferred after December 31, 1994, in satisfaction of any indebtedness.
Except as provided in paragraph (2), the amendments made by this section [amending this section and section 1275 of this title] shall apply to debt instruments issued, and stock transferred, after October 9, 1990, in satisfaction of any indebtedness.
See Effective Date of 1976 Amendment note set out under section 382 of this title.
Except as otherwise provided in this subsection, the amendment made by subsection (a) [amending this section] shall apply to transfers after the date of the enactment of this Act [July 18, 1984] in taxable years ending after such date.
pursuant to the exercise of an option to exchange debt for stock but only if such option was in effect at all times on June 7, 1984, and at all times after such date and only if at all times on June 7, 1984, the option and the debt were held by the same person.
immediately after such transfer, the transferee corporation owns 80 percent or more of the total value of the stock of the transferor corporation.
Except as provided in paragraph (2), the amendments made by section 2 [amending this section and sections 111, 118, 382, 703 and 1017 of this title] shall apply to any transaction which occurs after December 31, 1980, other than a transaction which occurs in a proceeding in a bankruptcy case or similar judicial proceeding (or in a proceeding under the Bankruptcy Act) [Title 11, Bankruptcy] commencing on or before December 31, 1980.
the basis of any property shall not be reduced under section 1017 of such Code (relating to reduction in basis in connection with discharges of indebtedness), as so amended, below the fair market value of such property on the date the debt is discharged.
The amendments made by section 3 [enacting sections 1398 and 1399 of this title and amending sections 443, 6012 and 6103 of this title] shall apply to any bankruptcy case commencing more than 90 days after the date of the enactment of this Act [Dec. 24, 1980].
The amendments made by section 4 [enacting section 370 of this title and amending sections 354, 355, 357, 368 and 381 of this title] shall apply to any bankruptcy case or similar judicial proceeding commencing after December 31, 1980.
which does not occur in a bankruptcy case or similar judicial proceeding (or in a proceeding under the Bankruptcy Act) commenced on or before December 31, 1980.
The amendments made by subsection (a) of section 5 [amending section 542 of this title] shall apply to any bankruptcy case or similar judicial proceeding commenced after December 31, 1980.
The amendments made by subsection (b) of section 5 [amending section 302 of this title] shall apply to stock which is issued after December 31, 1980 (other than stock issued pursuant to a plan of reorganization approved on or before that date).
The amendment made by subsection (c) of section 5 [amending section 337 of this title] shall apply to any bankruptcy case or similar judicial proceeding commenced after December 31, 1980.
The amendment made by subsection (d) of section 5 [amending section 1371 of this title] shall apply to any bankruptcy case commenced on or after October 1, 1979.
The amendments made by subsection (e) of section 5 [amending section 351 of this title] shall apply as provided in subsection (a) of this section.
The amendment made by subsection (f) of section 5 [amending section 312 of this title] shall apply as provided in subsection (a) of this section.
The amendments made by section 6 [enacting sections 6658 and 7464 of this title, amending sections 128, 354, 422, 1023, 3302, 6012, 6036, 6155, 6161, 6212, 6213, 6216, 6326 [now 6327], 6404, 6503, 6512, 6532, 6871, 6872, 6873, 7430, and 7508 of this title, repealing section 1018 of this title, and redesignating former section 7464 of this title as 7465] shall take effect on October 1, 1979, but shall not apply to any proceeding under the Bankruptcy Act [Title 11] commenced before October 1, 1979.
The debtor (or debtors) in a bankruptcy case or similar judicial proceeding may (with the approval of the court) elect to apply subsections (a), (c), and (d) by substituting ‘September 30, 1979’ for ‘December 31, 1980’ each place it appears in such subsections.
Any election made under paragraph (1) with respect to any proceeding shall apply to all parties to the proceeding.
Any election under this subsection may be revoked only with the consent of the Secretary of the Treasury or his delegate.
Any election under this subsection shall be made at such time, and in such manner, as the Secretary of the Treasury or his delegate may by regulations prescribe.
The term ‘bankruptcy case’ means any case under title 11 of the United States Code (as recodified by Public Law 95–598).
return requirements under section 6050P of such Code shall not apply to any discharge described in paragraph (1).
  So in original. The designation “(7)” probably should be preceded by “(a)”.

References: § 151
 § 151
 § 2
 § 2
 § 2
 § 2
 § 320
 § 6004
 § 225
 § 225
 § 13150
 § 13150
 § 13226
 § 13226
 § 13226
 § 13226
 § 13226
 § 13226
 § 13150
 § 13150
 § 13150
 § 13150
 § 13226
 § 13226
 § 13226
 § 11325
 § 11325
 § 11813
 § 1004
 § 1004
 § 1004
 § 1004
 § 1004
 § 822
 § 822
 § 1171
 § 231
 § 1847
 § 104
 § 822
 § 822
 § 822
 § 822
 § 822
 § 805
 § 805
 § 805
 § 621
 § 59
 § 405
 § 474
 § 721
 § 721
 § 59
 § 59
 § 621
 § 1076
 § 102
 § 304
 § 1951