Detailed Instructions: In this task, you are given text for US Congressional and California state bills, your task is to generate a summary for this bill.
Problem:SECTION 1. PROPER TAX TREATMENT OF CERTAIN FINANCIAL INDEBTEDNESS
DISCHARGED IN 2009 OR 2010.

(a) In General.--Section 108(a)(1) of the Internal Revenue Code of
1986 (relating to exclusion from gross income) is amended by striking
''or'' at the end of subparagraph (D), by striking the period at the
end of subparagraph (E) and inserting '', or'' and by adding at the end
the following new subparagraph:
''(F) the indebtedness discharged is applicable
financial indebtedness which is discharged after
December 31, 2008, and before January 1, 2011.''.
(b) Applicable Financial Indebtedness.--Section 108 of such Code is
amended by adding at the end the following new subsection:
''(i) Definitions and Rules Relating to Applicable Financial
Indebtedness.--For purposes of subsection (a)(1)(F)--
''(1) Applicable financial indebtedness.--The term
'applicable financial indebtedness' means indebtedness--
''(A) which was originally issued by a corporation,
or by a partnership engaged in a trade or business
(other than a trade or business of trading in stocks or
securities for the partnership's own account), and
''(B) which is--
''(i) indebtedness originally issued or
syndicated by a financial institution (as
defined in section 582(c)(2) without regard to
subparagraph (C) thereof) or a depository
institution holding company (as defined in
section 3(w)(1) of the Federal Deposit
Insurance Act (12 U.S.C. 1813(w)(1)),
''(ii) indebtedness which--
''(I) constitutes a security within
the meaning of the Securities Act of
1933, and
''(II) was originally issued
pursuant to a registration statement
that was declared effective under such
Act or pursuant to an exemption from,
or in a transaction not subject to, the
registration requirements of such Act,
or
''(iii) indebtedness that is traded on an
established market (within the meaning of
section 1273(b)(3)).
''(2) Applicable discharges.--Subsection (a)(1)(F) shall
only apply to a discharge of applicable financial indebtedness
if such discharge is by reason of--
''(A) the acquisition of the indebtedness by the
issuer of the indebtedness,
''(B) the acquisition of the indebtedness of the
issuer by a person related, or who becomes related, to
the issuer of the indebtedness from a person who is not
related to the issuer, or
''(C) the significant modification of the
indebtedness (within the meaning of section 1001).
For purposes of subparagraph (B), the determination of whether
a person is related to another person shall be made in the same
manner as under subsection (e)(4).''.
(c) Coordination of Exclusions.--Section 108(a)(2) of such Code is
amended--
(1) by striking ''and (E)'' in subparagraph (A) and
inserting ''(E), and (F)'', and
(2) by adding at the end the following new subparagraph:
''(D) Financial indebtedness exclusion takes
precedence over insolvency exclusion unless elected
otherwise.--Paragraph (1)(B) shall not apply to a
discharge to which paragraph (1)(F) applies unless the
taxpayer elects to apply paragraph (1)(B) in lieu of
paragraph (1)(F).''.
(d) Earnings and Profits.--Section 312(l) of such Code is amended
by adding at the end the following new paragraph:
''(3) Discharge of certain financial indebtedness.--The
earnings and profits of a corporation shall not include income
from a discharge of indebtedness to which section 108(a)(1)(F)
applies.''.
(e) Other Special Rules.--
(1) Treatment as market discount bond.--For purposes of the
Internal Revenue Code of 1986, any indebtedness acquired in a
transaction described in section 108(i)(2)(B) of such Code (as
added by subsection (b)), or received pursuant to an exchange
arising from a transaction described in section 108(i)(2)(C) of
such Code (as so added), shall be treated as a market discount
bond (within the meaning of section 1278(a)(1) of such Code)
having market discount equal to the amount (if any) which, but
for section 108(a)(1)(F) of such Code (as added by subsection
(a)), would have been includible in gross income by reason of
the discharge of such indebtedness in any such transaction.
(2) Acquisitions by foreign persons.--Any interest (or
original issue discount) paid or accrued after December 31,
2008, and before January 1, 2011, on indebtedness which is
described in section 108(a)(1)(F) of such Code by reason of the
acquisition of such indebtedness by a foreign person or by a
partnership (or other pass-through entity) in which a foreign
person is a partner (or other profits or capital owner) shall
not be subject to sections 871(h)(3), 881(c)(3)(B) or
881(c)(3)(C) of such Code.
Solution:
Amends the Internal Revenue Code to allow an exclusion from gross income for income attributable to the discharge of indebtedness relating to securities issued by certain financial entities and discharged after December 31, 2008, and before January 1, 2011.