FAVORABLE DECISION FOR SHAREHOLDERS OF INSOLVENT S CORPS.

• Author: Josephs, Stuart R.
• Position: United States Supreme Court - Brief Article

Resolving a split among the 3rd, 6th, 7th, 10th and 11th Circuit Courts of Appeals, the U.S. Supreme Court decided Jan. 9 that an insolvent S corporation's debt discharge income increased the basis of the shareholders stock in the corporation--even though this income was excluded from taxation. This increased basis permitted the shareholders to currently deduct...