Section 16.5 Alternative Election to Reduce Depreciable Basis in Property

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

D. (§16.5) Alternative Election to Reduce Depreciable Basis in Property

Debtors can make an election under the Tax Code to forego the tax attribute reduction prescribed in I.R.C. § 108(b) and instead reduce the basis in their depreciable property. See § 108(b)(5). Debtors make this election on their tax returns in the year in which the discharge of indebtedness occurs. See Treas. Reg. 1.108-4(b). This election, often referred to as the depreciable basis election, allows debtors to reduce their bases in depreciable assets by all or a portion of the discharge-of-indebtedness amount. Any portion of...