Section 16.3 Exception for Debtors in Bankruptcy

• Library: Bankruptcy Practice (2007 Ed. + 2015 Cum Supp)

B. (§16.3) Exception for Debtors in Bankruptcy

In the Bankruptcy Tax Act of 1980, Congress codified a long-standing judicial exception to the discharge-of-indebtedness rule for insolvent debtors and debtors who file for bankruptcy relief under Title 11 of the United States Code (the Bankruptcy Code). See Bankruptcy Tax Act of 1980, Pub. L. No. 96-589 § 2, 94 Stat. 3389, 3389–91 (1980) (codified at I.R.C. § 108(a) and (b)). For debtors in bankruptcy, the so-called bankruptcy exception applies if the...