Procedures for electing deferral of COD income on repurchased debt.

• Author: Josephs, Stuart R.
• Position: IRS NEWS

For debt discharges in tax years ending after 2008, a taxpayer can elect under Internal Revenue Code Sec. 108(i) to have cancellation of debt (COD) income from reacquiring an applicable debt instrument, after 2008 and before 2011, included in gross income ratably over five tax years beginning with 2014 (see California CPA, August 2009, Page 16).

There also is no reduction of the taxpayer's tax attributes.

An applicable debt instrument is any debt instrument issued by a C corporation or any other person in connection with the conduct of a trade or business. A debt instrument is any instrument or...