Affiliated group with insolvent members....

• Author: Duvall, Kevin A.

Sec. 108(a) excludes discharge of indebtedness income from gross income if the taxpayer is in a Title 11 case, or to the extent of the taxpayer's insolvency, when the discharge occurs. Under Sec. 108(b), the taxpayer's attributes, to the extent thereof, are reduced up to the amount of debt discharge that is excluded from income under Sec. 108(a).

In the first ruling on this issue (Letter Ruling 9121017), the IRS has held that a member of a consolidated...