California Code of Regulations › Title 18 - Public Revenues › Division 3 - Franchise Tax Board › Chapter 3.5 - Bank and Corporation Tax › Subchapter 6 - Gross Income › Article 1 - Definitions › Section 24271(h) - Income from Discharge of Indebtedness

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(1) Sale and Purchase by Corporation of its
					 Bonds.
(A) If bonds are issued by a
					 corporation at their face value, the corporation realizes no gain or loss. If
					 the corporation purchases any of such bonds at a price in excess of the issuing
					 price or face value, the excess of the purchase price over the issuing price or
					 face value is a deductible expense of the income year. If, however, the
					 corporation purchases any of such bonds at a price less than the issuing price
					 or face value, the excess of the issuing price or face value over the purchase
					 price is income for the income year.
(B) If subsequent to December 31, 1927, in
					 the case of taxpayers subject to Chapter 2 or December 31, 1936, in the case of
					 taxpayers subject to Chapter 3, bonds are issued by a corporation at a premium,
					 the net amount of such premium is income which should be prorated or amortized
					 over the life of the bonds. If the corporation purchases any of such bonds at a
					 price in excess of the issuing price minus any amount of premium already
					 returned as income, the excess of the purchase price over the issuing price
					 minus any amount of premium already returned as income (or over the face value
					 plus any amount of premium not yet returned as income) is a deductible expense
					 for the income year. If, however, the corporation purchases any of such bonds
					 at a price less than the issuing price minus any amount of premium already
					 returned as income, the excess of the issuing price, minus any amount of
					 premium already returned as income (or of the face value plus any amount of
					 premium not yet returned as income), over the purchase price is income for the
					 income year.
(C) If bonds are
					 issued by a corporation at a discount, the net amount of such discount is
					 deductible and should be prorated or amortized over the life of the bonds. If
					 the corporation purchases any of such bonds at a price in excess of the issuing
					 price plus any amount of discount already deducted, the excess of the purchase
					 price over the issuing price plus any amount of discount already deducted (or
					 over the face value minus any amount of discount not yet deducted) is a
					 deductible expense for the income year. If, however, the corporation purchases
					 any of such bonds at a price less than the issuing price plus any amount of
					 discount already deducted, the excess of the issuing price, plus any amount of
					 discount already deducted (or of the face value minus any amount of discount
					 not yet deducted), over the purchase price is income for the income
					 year.
(D) If bonds were issued by a
					 corporation prior to January 1, 1928, in the case of taxpayers subject to
					 Chapter 2, or January 1, 1937 in the case of taxpayers subject to Chapter 3, at
					 a premium, the net amount of such premium was income for the year in which the
					 bonds were issued and should not be prorated or amortized over the life of the
					 bonds. If the corporation purchases any of such bonds at a price in excess of
					 the face value of the bonds, the excess of the purchase price over the face
					 value is a deductible expense for the income year. If, however, the corporation
					 purchases any of such bonds at a price less than the face value, the excess of
					 the face value over the purchase price is income for the income
					 year.