26 USC 108 - Income from discharge of indebtedness

1 So in original. Probably should be “140(a)(8)”. See References in Text note below.

of the Truth in Lending Act),

2 So in original. Such section defines the term “private educational lender”.

lender (as defined in section 140(a) of the Truth in Lending Act) under which the funds from which the loan was made were provided to such educational organization, or

Editorial Notes

References in Text

Sections 338B(g) and 338I of the Public Health Service Act, referred to in subsec. (f)(4), are classified to sections 254l–1(g) and 254q–1, respectively, of Title 42, The Public Health and Welfare.

Section 140(a) of the Truth in Lending Act, referred to in subsec. (f)(5), is classified to section 1650(a) of Title 15, Commerce and Trade. Section 140(a)(7) of the Act was redesignated section 140(a)(8) by Puspan. L. 115–174, title VI, § 601(a)(1)(A), May 24, 2018, 132 Stat. 1365.

Amendments

2021—Subsec. (f)(5). Puspan. L. 117–2 added par. (5) and struck out former par. (5) which related to discharges on account of death or disability.

2020—Subsec. (a)(1)(E). Puspan. L. 116–260, § 114(a), substituted “January 1, 2026” for “January 1, 2021” in two places.

Subsec. (h)(2). Puspan. L. 116–260, § 114(span), substituted “$750,000 ($375,000” for “$2,000,000 ($1,000,000”.

2019—Subsec. (a)(1)(E). Puspan. L. 116–94, § 101(a), substituted “January 1, 2021” for “January 1, 2018” in two places.

Subsec. (h)(2). Puspan. L. 116–94, § 101(span), inserted “and determined without regard to the substitution described in section 163(h)(3)(F)(i)(II)” after “clause (ii) thereof”.

2018—Subsec. (a)(1)(E). Puspan. L. 115–123 substituted “January 1, 2018” for “January 1, 2017” in two places.

2017—Subsec. (f)(5). Puspan. L. 115–97 added par. (5).

2015—Subsec. (a)(1)(E). Puspan. L. 114–113, § 151(span), substituted “discharged—” for “discharged before January 1, 2017.” and added cls. (i) and (ii).

Puspan. L. 114–113, § 151(a), substituted “January 1, 2017” for “January 1, 2015”.

2014—Subsec. (a)(1)(E). Puspan. L. 113–295 substituted “January 1, 2015” for “January 1, 2014”.

2013—Subsec. (a)(1)(E). Puspan. L. 112–240 substituted “January 1, 2014” for “January 1, 2013”.

2010—Subsec. (f)(4). Puspan. L. 111–148 amended par. (4) generally. Prior to amendment, text read as follows: “In the case of an individual, gross income shall not include any amount received under section 338B(g) of the Public Health Service Act or under a State program described in section 338I of such Act.”

2009—Subsec. (i). Puspan. L. 111–5 added subsec. (i).

2008—Subsec. (a)(1)(E). Puspan. L. 110–343 substituted “January 1, 2013” for “January 1, 2010”.

2007—Subsec. (a)(1)(E). Puspan. L. 110–142, § 2(a), added subpar. (E).

Subsec. (a)(2)(A). Puspan. L. 110–142, § 2(c)(1), substituted “(D), and (E)” for “and (D)”.

Subsec. (a)(2)(C). Puspan. L. 110–142, § 2(c)(2), added subpar. (C).

Subsec. (h). Puspan. L. 110–142, § 2(span), added subsec. (h).

2004—Subsec. (e)(8). Puspan. L. 108–357, § 896(a), amended span and text of par. (8) generally. Prior to amendment, text read as follows: “For purposes of determining income of a debtor from discharge of indebtedness, if a debtor corporation transfers stock to a creditor in satisfaction of its indebtedness, such corporation shall be treated as having satisfied the indebtedness with an amount of money equal to the fair market value of the stock.”

Subsec. (f)(4). Puspan. L. 108–357, § 320(a), added par. (4).

2002—Subsec. (d)(7)(A). Puspan. L. 107–147 inserted “, including by not taking into account under section 1366(a) any amount excluded under subsection (a) of this section” before period at end.

1998—Subsec. (f)(2). Puspan. L. 105–206, § 6004(f)(1), amended concluding provisions generally. Prior to amendment, concluding provisions read as follows: “The term ‘student loan’ includes any loan made by an educational organization so described or by an organization exempt from tax under section 501(a) to refinance a loan meeting the requirements of the preceding sentence.”

Subsec. (f)(3). Puspan. L. 105–206, § 6004(f)(2), struck out “(or by an organization described in paragraph (2)(E) from funds provided by an organization described in paragraph (2)(D))” after “paragraph (2)(D)”.

1997—Subsec. (f)(2). Puspan. L. 105–34, § 225(a)(1), added subpar. (D) and concluding provisions and struck out former subpar. (D) which read as follows: “any educational organization so described pursuant to an agreement with any entity described in subparagraph (A), (B), or (C) under which the funds from which the loan was made were provided to such educational organization.”

Subsec. (f)(2)(B). Puspan. L. 105–34, § 225(a)(1), struck out “or” at end.

Subsec. (f)(3). Puspan. L. 105–34, § 225(a)(2), added par. (3).

1996—Subsec. (d)(9)(A). Puspan. L. 104–188 substituted “paragraph (3)(C)” for “paragraph (3)(B)”.

1993—Subsec. (a)(1)(D). Puspan. L. 103–66, § 13150(a), added subpar. (D).

Subsec. (a)(2)(A). Puspan. L. 103–66, § 13150(c)(1), substituted “, (C), and (D)” for “and (C)”.

Subsec. (a)(2)(B). Puspan. L. 103–66, § 13150(c)(2), amended span and text of subpar. (B) generally. Prior to amendment, text read as follows: “Subparagraph (C) of paragraph (1) shall not apply to a discharge to the extent the taxpayer is insolvent.”

Subsec. (span)(2)(C) to (E). Puspan. L. 103–66, § 13226(span)(1), added subpar. (C) and redesignated former subpars. (C) and (D) as (D) and (E), respectively. Former subpar. (E) redesignated (F).

Subsec. (span)(2)(F). Puspan. L. 103–66, § 13226(span)(2), added subpar. (F). Former subpar. (F) redesignated (G).

Puspan. L. 103–66, § 13226(span)(1), redesignated subpar. (E) as (F).

Subsec. (span)(2)(G). Puspan. L. 103–66, § 13226(span)(2), redesignated subpar. (F) as (G).

Subsec. (span)(3)(B). Puspan. L. 103–66, § 13226(span)(3)(A), amended span and text of subpar. (B) generally. Prior to amendment, text read as follows: “The reductions described in subparagraphs (B) and (E) of paragraph (2) shall be 33⅓ cents for each dollar excluded by subsection (a).”

Subsec. (span)(4)(B). Puspan. L. 103–66, § 13226(span)(3)(B), substituted “(D)” for “(C)” in span and text.

Subsec. (span)(4)(C). Puspan. L. 103–66, § 13226(span)(3)(C), substituted “(G)” for “(E)” in span and text.

Subsec. (c). Puspan. L. 103–66, § 13150(span), added subsec. (c).

Subsec. (d). Puspan. L. 103–66, § 13150(c)(3)(B), substituted “certain provisions” for “subsections (a), (span) and (g)” in span.

Subsec. (d)(6), (7)(A). Puspan. L. 103–66, § 13150(c)(3)(A), (C), substituted “Certain provisions” for “Subsections (a), (span) and (g)” in span and “subsections (a), (span), (c), and (g)” for “subsections (a), (span), and (g)” in text.

Subsec. (d)(7)(B). Puspan. L. 103–66, § 13150(c)(4), inserted at end “The preceding sentence shall not apply to any discharge to the extent that subsection (a)(1)(D) applies to such discharge.”

Subsec. (d)(9)(A). Puspan. L. 103–66, § 13150(c)(5), inserted “or under paragraph (3)(B) of subsection (c)” after “subsection (span)”.

Subsec. (e)(6). Puspan. L. 103–66, § 13226(a)(2)(B), substituted “Except as provided in regulations, for” for “For”.

Subsec. (e)(8). Puspan. L. 103–66, § 13226(a)(1)(B), amended span and text of par. (8) generally. Prior to amendment, text read as follows: “For purposes of determining income of the debtor from discharge of indebtedness, the stock for debt exception shall not apply—

“(A) to the issuance of nominal or token shares, or

“(B) with respect to an unsecured creditor, where the ratio of the value of the stock received by such unsecured creditor to the amount of his indebtedness cancelled or exchanged for stock in the workout is less than 50 percent of a similar ratio computed for all unsecured creditors participating in the workout.

Any stock which is disqualified stock (as defined in paragraph (10)(B)(ii)) shall not be treated as stock for purposes of this paragraph.”

Subsec. (e)(10), (11). Puspan. L. 103–66, § 13226(a)(1)(A), redesignated par. (11) as (10) and struck out former par. (10) which related to satisfaction of indebtedness by transfer of corporation’s stock.

Subsec. (g)(3)(B). Puspan. L. 103–66, § 13226(span)(3)(D), substituted “subparagraphs (A), (B), (C), (D), (F), and (G)” for “subparagraphs (A), (B), (C), and (E)” and “subparagraphs (B), (C), and (G)” for “subparagraphs (B) and (E)” and inserted before period at end “and the attribute described in subparagraph (F) of subsection (span)(2) to the extent attributable to any passive activity credit carryover”.

1990—Subsec. (e)(8). Puspan. L. 101–508, § 11325(span)(2), inserted provision at end that any stock which is a disqualified stock, as so defined, not be treated as stock for purposes of this paragraph.

Subsec. (e)(10)(B). Puspan. L. 101–508, § 11325(span)(1), substituted span for one which read: “Exception for title 11 cases and insolvent debtors” and amended text generally. Prior to amendment, text read as follows: “Subparagraph (A) shall not apply in the case of a debtor in a title 11 case or to the extent the debtor is insolvent.”

Subsec. (e)(11). Puspan. L. 101–508, § 11325(a)(1), added par. (11).

Subsec. (g)(1)(B). Puspan. L. 101–508, § 11813(span)(6), substituted “section 49(a)(1)(D)(iv)” for “section 46(c)(8)(D)(iv)”.

1988—Subsec. (a)(1)(C). Puspan. L. 100–647, § 1004(a)(1), added subpar. (C).

Subsec. (a)(2). Puspan. L. 100–647, § 1004(a)(2), amended par. (2) generally. Prior to amendment, par. (2) read as follows: “Subparagraph (B) of paragraph (1) shall not apply to a discharge which occurs in a title 11 case.”

Subsec. (span). Puspan. L. 100–647, § 1004(a)(3), struck out “in title 11 case or insolvency” after “Reduction of tax attributes” in span and substituted “subparagraph (A), (B), or (C)” for “subparagraph (A) or (B)” in text of par. (1).

Subsec. (d). Puspan. L. 100–647, § 1004(a)(6)(B), which directed amendment of subsec. (d) span by substituting “subsections (a), (span), and (g)” for “subsections (a), and (span)”, was executed by making the substitution for “subsections (a) and (span)” as the probable intent of Congress.

Subsec. (d)(6). Puspan. L. 100–647, § 1004(a)(6)(A), (C), substituted “Subsections (a), (span), and (g)” for “Subsections (a) and (span)” in span and “subsections (a), (span), and (g)” for “subsections (a) and (span)” in text.

Subsec. (d)(7)(A). Puspan. L. 100–647, § 1004(a)(6)(A), (C), substituted “Subsections (a), (span), and (g)” for “Subsections (a) and (span)” in span and “subsections (a), (span), and (g)” for “subsections (a) and (span)” in text.

Subsec. (g). Puspan. L. 100–647, § 1004(a)(4), substituted “indebtedness” for “indebtedness of solvent farmers” in span and amended text generally. Prior to amendment, text read as follows:

“(1) In general.—For purposes of this section and section 1017, the discharge by a qualified person of qualified farm indebtedness of a taxpayer who is not insolvent at the time of the discharge shall be treated in the same manner as if the discharge had occurred when the taxpayer was insolvent.

“(2) Qualified farm indebtedness.—For purposes of this subsection, indebtedness of a taxpayer shall be treated as qualified farm indebtedness if—

“(A) such indebtedness was incurred directly in connection with the operation by the taxpayer of the trade or business of farming, and

“(B) 50 percent or more of the average annual gross receipts of the taxpayer for the 3 taxable years preceding the taxable year in which the discharge of such indebtedness occurs is attributable to the trade or business of farming.

“(3) Qualified person.—For purposes of this subsection, the term ‘qualified person’ means a person described in section 46(c)(8)(D)(iv).”

1986—Subsec. (a)(1)(C). Puspan. L. 99–514, § 822(a), struck out subpar. (C) relating to exclusion from gross income if the indebtedness discharged is qualified business indebtedness.

Subsec. (a)(2). Puspan. L. 99–514, § 822(span)(1), substituted “Subparagraph (B) of paragraph (1)” for “Subparagraphs (B) and (C) of paragraph (1)” in subpar. (A), struck out subpar. (A) designation and span, and struck out subpar. (B) providing that insolvency exclusion takes precedence over qualified business exclusion.

Subsec. (span)(2)(B). Puspan. L. 99–514, § 231(d)(3)(D), substituted “General business credit” for “Research credit and general business credit” in span and amended text, as amended by this Act (Puspan. L. 99–514, § 1171(span)(4) (see below)), generally. Prior to amendment, text read as follows: “Any carryover to or from the taxable year of a discharge of an amount for purposes of determining the amount allowable as a credit under—

“(i) section 30 (relating to credit for increasing research activities), or

“(ii) section 38 (relating to general business credit).

For purposes of this subparagraph, there shall not be taken into account any portion of a carryover which is attributable to the employee stock ownership credit determined under section 41.”

Puspan. L. 99–514, § 1171(span)(4), struck out last sentence which had been eliminated by the general amendment of subpar. (B) by Puspan. L. 99–514, § 231(d)(3)(D). See above.

Subsec. (span)(2)(E). Puspan. L. 99–514, § 1847(span)(7), substituted “section 27” for “section 33”.

Subsec. (span)(3). Puspan. L. 99–514, § 104(span)(2), substituted “33⅓ cents” for “50 cents”.

Subsec. (c). Puspan. L. 99–514, § 822(span)(2), struck out subsec. (c) relating to tax treatment of discharge of qualified business indebtedness.

Subsec. (d). Puspan. L. 99–514, § 822(span)(3)(B), struck out reference to subsec. (c) in span.

Subsec. (d)(4). Puspan. L. 99–514, § 822(span)(3)(A), struck out par. (4) relating to treatment of indebtedness as qualified business indebtedness.

Subsec. (d)(6), (7)(A). Puspan. L. 99–514, § 822(span)(3)(B), struck out reference to subsec. (c) in span and text.

Subsec. (d)(7)(B). Puspan. L. 99–514, § 822(span)(3)(C), struck out “The preceding sentence shall not apply to any discharge to the extent that subsection (a)(1)(C) applies to such discharge.”

Subsec. (d)(9)(A). Puspan. L. 99–514, § 822(span)(3)(D), struck out “under paragraph (4) of this subsection or” after “An election”.

Subsec. (e)(7)(A)(ii)(I). Puspan. L. 99–514, § 805(c)(2), substituted “subsection (a) or (span) of section 166” for “subsection (a), (span), or (c) of section 166”.

Subsec. (e)(7)(B) to (D). Puspan. L. 99–514, § 805(c)(3), redesignated subpars. (C) to (E) as (B) to (D), respectively, and struck out former subpar. (B) which related to taxpayers on reserve method.

Subsec. (e)(7)(E), (F). Puspan. L. 99–514, § 805(c)(3), (4), redesignated subpar. (F) as (E) and substituted “the foregoing subparagraphs” for “subparagraphs (A), (B), (C), (D), and (E)”. Former subpar. (E) redesignated (D).

Subsec. (e)(10)(C). Puspan. L. 99–514, § 621(e), repealed the amendment by Puspan. L. 98–369, § 59(span)(1), which had added subpar. (C) creating an exception for transfers in certain workouts of the satisfaction of indebtedness by corporation’s stock. See 1984 Amendment note below.

Subsec. (g). Puspan. L. 99–514, § 405(a), added subsec. (g).

1984—Subsec. (span)(2)(B). Puspan. L. 98–369, § 474(r)(5), substituted provisions relating to research credits and general business credits covering carryovers to or from the taxable year of a discharge of an amount for purposes of determining the amount allowable as a credit under section 30 (relating to credit for increasing research activities), or section 38 (relating to general business credit), and directing that there shall not be taken into account any portion of a carryover which is attributable to the employee stock ownership credit determined under section 41 for former provisions covering carryovers to or from the taxable year of the discharge of an amount for purposes of determining the amount of a credit allowable under section 38 (relating to investment in certain depreciable property), section 40 (relating to expenses of work incentive programs), section 44B (relating to credit for employment of certain new employees), section 44E (relating to alcohol used as a fuel), or section 44F (relating to credit for increasing research activities), and directing that, for purposes of clause (i), there could not be taken into account any portion of a carryover which was attributable to the employee plan credit (within the meaning of section 48(o)(3)).

Subsec. (d)(6). Puspan. L. 98–369, § 721(span)(2), struck out “or S corporation shareholder level” in span and second sentence which provided that “In the case of an S corporation, subsections (a), (span), and (c) shall apply at the shareholder level.”. See par. (7)(A).

Subsec. (d)(7) to (10). Puspan. L. 98–369, § 721(span)(2), added par. (7) and redesignated former pars. (7) to (9) as (8) to (10), respectively.

Subsec. (e)(10). Puspan. L. 98–369, § 59(a), added par. (10).

Subsec. (e)(10)(C). Puspan. L. 98–369, § 59(span)(1), which added subpar. (C), effective as if included in the amendments made by section 806(e) and (f) of Puspan. L. 94–455, was repealed by Puspan. L. 99–514, § 621(e), (f)(2), eff. Jan. 1, 1986, with certain exceptions, see Effective Date of 1986 Amendment note below.

Subsec. (f). Puspan. L. 98–369, § 1076(a), added subsec. (f).

1983—Subsec. (span)(2)(B)(v). Puspan. L. 97–448, § 102(h)(1), added cl. (v).

Subsec. (e)(7)(A)(iii). Puspan. L. 97–448, § 304(d), added cl. (iii).

1982—Subsec. (d)(6). Puspan. L. 97–354 inserted “or S corporation shareholder level” in span and inserted “In the case of an S corporation, subsections (a), (span), and (c) shall be applied at the shareholder level.”

1980—Puspan. L. 96–589 completely revised and expanded provisions by specifying the types of indebtedness and by setting out priorities among the exclusions, to reflect the revision of Title 11, Bankruptcy, in 1978.

1976—Puspan. L. 94–455, § 1951(span)(2)(A), struck out “(a) Special rule of exclusion.—” after “Income from discharge of indebtedness” and struck out subsec. (span) which related to discharge, cancellation, or modification of indebtedness of certain railroad corporations.

Puspan. L. 94–455, § 1906(span)(13)(A), struck out “or his delegate” after “Secretary”.

1960—Subsec. (span). Puspan. L. 86–496 provided that if the discharge, cancellation, or modification of any indebtedness is effected pursuant to a court order in a receivership proceeding or in a proceeding under section 77 of the Bankruptcy Act, commenced before Jan. 1, 1960, then no amount is to be included in gross income with respect to it, and struck out provisions which made subsection inapplicable to discharges occurring in a taxable year beginning after Dec. 31, 1957.

1956—Subsec. (span). Act June 29, 1956, substituted “December 31, 1957” for “December 31, 1955”.

Statutory Notes and Related Subsidiaries

Effective Date of 2021 Amendment

Puspan. L. 117–2, title IX, § 9675(span), Mar. 11, 2021, 135 Stat. 186, provided that: “The amendment made by this section [amending this section] shall apply to discharges of loans after December 31, 2020.”

Effective Date of 2020 Amendment

Puspan. L. 116–260, div. EE, title I, § 114(c), Dec. 27, 2020, 134 Stat. 3050, provided that: “The amendments made by this section [amending this section] shall apply to discharges of indebtedness after December 31, 2020.”

Effective Date of 2019 Amendment

Puspan. L. 116–94, div. Q, title I, § 101(c), Dec. 20, 2019, 133 Stat. 3228, provided that: “The amendments made by this section [amending this section] shall apply to discharges of indebtedness after December 31, 2017.”

Effective Date of 2018 Amendment

Puspan. L. 115–123, div. D, title I, § 40201(span), Fespan. 9, 2018, 132 Stat. 145, provided that: “The amendments made by this section [amending this section] shall apply to discharges of indebtedness after December 31, 2016.”

Effective Date of 2017 Amendment

Puspan. L. 115–97, title I, § 11031(span), Dec. 22, 2017, 131 Stat. 2081, provided that: “The amendment made by this section [amending this section] shall apply to discharges of indebtedness after December 31, 2017.”

Effective Date of 2015 Amendment

Puspan. L. 114–113, div. Q, title I, § 151(c), Dec. 18, 2015, 129 Stat. 3066, provided that:

“(1)Extension.—The amendment made by subsection (a) [amending this section] shall apply to discharges of indebtedness after December 31, 2014.

“(2)Modification.—The amendment made by subsection (span) [amending this section] shall apply to discharges of indebtedness after December 31, 2015.”

Effective Date of 2014 Amendment

Puspan. L. 113–295, div. A, title I, § 102(span), Dec. 19, 2014, 128 Stat. 4013, provided that: “The amendment made by this section [amending this section] shall apply to indebtedness discharged after December 31, 2013.”

Effective Date of 2013 Amendment

Puspan. L. 112–240, title II, § 202(span), Jan. 2, 2013, 126 Stat. 2323, provided that: “The amendment made by this section [amending this section] shall apply to indebtedness discharged after December 31, 2012.”

Effective Date of 2010 Amendment

Puspan. L. 111–148, title X, § 10908(span), Mar. 23, 2010, 124 Stat. 1021, provided that: “The amendment made by this section [amending this section] shall apply to amounts received by an individual in taxable years beginning after December 31, 2008.”

Effective Date of 2009 Amendment

Puspan. L. 111–5, div. B, title I, § 1231(span), Fespan. 17, 2009, 123 Stat. 341, provided that: “The amendments made by this section [amending this section] shall apply to discharges in taxable years ending after December 31, 2008.”

Effective Date of 2008 Amendment

Puspan. L. 110–343, div. A, title III, § 303(span), Oct. 3, 2008, 122 Stat. 3807, provided that: “The amendment made by this section [amending this section] shall apply to discharges of indebtedness occurring on or after January 1, 2010.”

Effective Date of 2007 Amendment

Puspan. L. 110–142, § 2(d), Dec. 20, 2007, 121 Stat. 1804, provided that: “The amendments made by this section [amending this section] shall apply to discharges of indebtedness on or after January 1, 2007.”

Effective Date of 2004 Amendment

Puspan. L. 108–357, title III, § 320(c), Oct. 22, 2004, 118 Stat. 1473, provided that: “The amendments made by this section [amending this section, sections 3121, 3231, 3306, and 3401 of this title, and section 409 of Title 42, The Public Health and Welfare] shall apply to amounts received by an individual in taxable years beginning after December 31, 2003.”

Puspan. L. 108–357, title VIII, § 896(span), Oct. 22, 2004, 118 Stat. 1649, provided that: “The amendment made by this section [amending this section] shall apply with respect to cancellations of indebtedness occurring on or after the date of the enactment of this Act [Oct. 22, 2004].”

Effective Date of 2002 Amendment

Puspan. L. 107–147, title IV, § 402(span), Mar. 9, 2002, 116 Stat. 40, provided that:

“(1)In general.—Except as provided in paragraph (2), the amendment made by this section [amending this section] shall apply to discharges of indebtedness after October 11, 2001, in taxable years ending after such date.

“(2)Exception.—The amendment made by this section shall not apply to any discharge of indebtedness before March 1, 2002, pursuant to a plan of reorganization filed with a bankruptcy court on or before October 11, 2001.”

Effective Date of 1998 Amendment

Amendment by Puspan. L. 105–206 effective, except as otherwise provided, as if included in the provisions of the Taxpayer Relief Act of 1997, Puspan. L. 105–34, to which such amendment relates, see section 6024 of Puspan. L. 105–206, set out as a note under section 1 of this title.

Effective Date of 1997 Amendment

Puspan. L. 105–34, title II, § 225(span), Aug. 5, 1997, 111 Stat. 820, provided that: “The amendments made by this section [amending this section] shall apply to discharges of indebtedness after the date of the enactment of this Act [Aug. 5, 1997].”

Effective Date of 1996 Amendment

Amendment by Puspan. L. 104–188 effective as if included in the provision of the Revenue Reconciliation Act of 1993, Puspan. L. 103–66, §§ 13001–13444, to which such amendment relates, see section 1703(o) of Puspan. L. 104–188, set out as a note under section 39 of this title.

Effective Date of 1993 Amendment

Puspan. L. 103–66, title XIII, § 13150(d), Aug. 10, 1993, 107 Stat. 448, provided that: “The amendments made by this section [amending this section and sections 703 and 1017 of this title] shall apply to discharges after December 31, 1992, in taxable years ending after such date.”

Puspan. L. 103–66, title XIII, § 13226(a)(3), Aug. 10, 1993, 107 Stat. 487, provided that:

“(A)In general.—Except as otherwise provided in this paragraph, the amendments made by this subsection [amending this section and section 382 of this title] shall apply to stock transferred after December 31, 1994, in satisfaction of any indebtedness.

“(B)Exception for title 11 cases.—The amendments made by this subsection shall not apply to stock transferred in satisfaction of any indebtedness if such transfer is in a title 11 or similar case (as defined in section 368(a)(3)(A) of the Internal Revenue Code of 1986) which was filed on or before December 31, 1993.”

Puspan. L. 103–66, title XIII, § 13226(span)(4), Aug. 10, 1993, 107 Stat. 488, provided that: “The amendments made by this subsection [amending this section] shall apply to discharges of indebtedness in taxable years beginning after December 31, 1993.”

Effective Date of 1990 Amendment

Puspan. L. 101–508, title XI, § 11325(c), Nov. 5, 1990, 104 Stat. 1388–466, provided that:

“(1)In general.—Except as provided in paragraph (2), the amendments made by this section [amending this section and section 1275 of this title] shall apply to debt instruments issued, and stock transferred, after October 9, 1990, in satisfaction of any indebtedness.

“(2)Exceptions.—The amendments made by this section shall not apply to any debt instrument issued, or stock transferred, in satisfaction of any indebtedness if such issuance or transfer (as the case may be)—

“(A) is in a title 11 or similar case (as defined in section 368(a)(3)(A) of the Internal Revenue Code of 1986) which was filed on or before October 9, 1990,

“(B) is pursuant to a written binding contract in effect on October 9, 1990, and at all times thereafter before such issuance or transfer,

“(C) is pursuant to a transaction which was described in documents filed with the Securities and Exchange Commission on or before October 9, 1990, or

“(D) is pursuant to a transaction—

“(i) the material terms of which were described in a written public announcement on or before October 9, 1990,

“(ii) which was the subject of a prior filing with the Securities and Exchange Commission, and

“(iii) which is the subject of a subsequent filing with the Securities and Exchange Commission before January 1, 1991.”

Amendment by section 11813(span)(6) of Puspan. L. 101–508 applicable to property placed in service after Dec. 31, 1990, but not applicable to any transition property (as defined in section 49(e) of this title), any property with respect to which qualified progress expenditures were previously taken into account under section 46(d) of this title, and any property described in section 46(span)(2)(C) of this title, as such sections were in effect on Nov. 4, 1990, see section 11813(c) of Puspan. L. 101–508, set out as a note under section 45K of this title.

Effective Date of 1988 Amendment

Amendment by Puspan. L. 100–647 effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Puspan. L. 99–514, to which such amendment relates, see section 1019(a) of Puspan. L. 100–647, set out as a note under section 1 of this title.

Effective Date of 1986 Amendment

Amendment by section 104(span)(2) of Puspan. L. 99–514 applicable to taxable years beginning after Dec. 31, 1986, see section 151(a) of Puspan. L. 99–514, set out as a note under section 1 of this title.

Amendment by section 231(d)(3)(D) of Puspan. L. 99–514 applicable to taxable years beginning after Dec. 31, 1985, see section 231(g) of Puspan. L. 99–514, set out as a note under section 41 of this title.

Puspan. L. 99–514, title IV, § 405(c), Oct. 22, 1986, 100 Stat. 2224, provided that: “The amendments made by this section [amending this section and section 1017 of this title] shall apply to discharges of indebtedness occurring after April 9, 1986, in taxable years ending after such date.”

Repeal by section 621(e)(1) of Puspan. L. 99–514 of amendment by section 59(span)(1) of Puspan. L. 99–369, which was effective as if included in the amendments made by section 806(e) and (f) of Puspan. L. 94–455, effective Jan. 1, 1986, with certain exceptions, see section 621(f)(2) of Puspan. L. 99–514, set out as a note under section 382 of this title.

Amendment by section 805(c)(2), (4) of Puspan. L. 99–514 applicable to taxable years beginning after Dec. 31, 1986, with certain changes required in method of accounting, see section 805(d) of Puspan. L. 99–514, set out as a note under section 166 of this title.

Puspan. L. 99–514, title VIII, § 822(c), Oct. 22, 1986, 100 Stat. 2373, provided that: “The amendments made by this section [amending this section and section 1017 of this title] shall apply to discharges after December 31, 1986.”

Amendment by section 1171(span)(4) of Puspan. L. 99–514 applicable to compensation paid or accrued after Dec. 31, 1986, in taxable years ending after such date, except as otherwise provided, see section 1171(c) of Puspan. L. 99–514, set out as a note under section 38 of this title.

Amendment by section 1847(span)(7) of Puspan. L. 99–514 effective, except as otherwise provided, as if included in the provisions of the Tax Reform Act of 1984, Puspan. L. 98–369, div. A, to which such amendment relates, see section 1881 of Puspan. L. 99–514, set out as a note under section 48 of this title.

Effective Date of 1984 Amendment

Puspan. L. 98–369, div. A, title I, § 59(span)(2), July 18, 1984, 98 Stat. 577, provided that: “The amendment made by paragraph (1) [amending this section] shall take effect as if it had been included in the amendments made by subsections (e) and (f) of section 806 of the Tax Reform Act of 1976 [Puspan. L. 94–455].”See Effective Date of 1976 Amendment note set out under section 382 of this title.

Puspan. L. 98–369, div. A, title I, § 59(span)[(c)], July 18, 1984, 98 Stat. 577, provided that:

“(1)In general.—Except as otherwise provided in this subsection, the amendment made by subsection (a) [amending this section] shall apply to transfers after the date of the enactment of this Act [July 18, 1984] in taxable years ending after such date.

“(2)Transitional rule.—The amendment made by subsection (a) shall not apply to the transfer by a corporation of its stock in exchange for debt of the corporation after the date of the enactment of this Act if such transfer is—

“(A) pursuant to a written contract requiring such transfer which was binding on the corporation at all times on June 7, 1984, and at all times after such date but only if the transfer takes place before January 1, 1985, and only if the transferee held the debt at all times on June 7, 1984, or

“(B) pursuant to the exercise of an option to exchange debt for stock but only if such option was in effect at all times on June 7, 1984, and at all times after such date and only if at all times on June 7, 1984, the option and the debt were held by the same person.

“(3)Certain transfers to controlling shareholder.—The amendment made by subsection (a) shall not apply to any transfer before January 1, 1985, by a corporation of its stock in exchange for debt of such corporation if—

“(A) such transfer is to another corporation which at all times on June 7, 1984, owned 75 percent or more of the total value of the stock of the corporation making such transfer, and

“(B) immediately after such transfer, the transferee corporation owns 80 percent or more of the total value of the stock of the transferor corporation.

“(4)Certain transfers pursuant to debt restructure agreement.—The amendment made by subsection (a) shall not apply to the transfer by a corporation of its stock in exchange for debt of the corporation after the date of the enactment of this Act and before January 1, 1985, if—

“(A) such transfer is covered by a debt restructure agreement entered into by the corporation during November 1983, and

“(B) such agreement was specified in a registration statement filed with the Securities and Exchange Commission by the corporation on March 7, 1984.”

Amendment by section 474(r)(5) of Puspan. L. 98–369 applicable to taxable years beginning after Dec. 31, 1983, and to carrybacks from such years, see section 475(a) of Puspan. L. 98–369, set out as a note under section 21 of this title.

Amendment by section 721(span) of Puspan. L. 98–369 applicable to contributions to capital after Dec. 31, 1980, in taxable years ending after such date, see section 721(y)(2) of Puspan. L. 98–369, set out as a note under section 1361 of this title.

Puspan. L. 98–369, div. A, title X, § 1076(span), July 18, 1984, 98 Stat. 1054, provided that: “The amendments made by this section [amending this section] shall apply to discharges of indebtedness made on or after January 1, 1983.”

Effective Date of 1983 Amendment

Amendment by title I of Puspan. L. 97–448 effective, except as otherwise provided, as if it had been included in the provision of the Economic Recovery Tax Act of 1981, Puspan. L. 97–34, to which such amendment relates, see section 109 of Puspan. L. 97–448, set out as a note under section 1 of this title.

Effective Date of 1982 Amendment

Amendment by Puspan. L. 97–354 applicable to taxable years beginning after Dec. 31, 1982, see section 6(a) of Puspan. L. 97–354, set out as an Effective Date note under section 1361 of this title.

Effective Date of 1980 Amendment

Puspan. L. 96–589, § 7, Dec. 24, 1980, 94 Stat. 3411, as amended by Puspan. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that:

“(a)For Section 2 (Relating to Tax Treatment of Discharge of Indebtedness).—

“(1)In general.—Except as provided in paragraph (2), the amendments made by section 2 [amending this section and sections 111, 118, 382, 703 and 1017 of this title] shall apply to any transaction which occurs after December 31, 1980, other than a transaction which occurs in a proceeding in a bankruptcy case or similar judicial proceeding (or in a proceeding under the Bankruptcy Act) [Title 11, Bankruptcy] commencing on or before December 31, 1980.

“(2)Transitional rule.—In the case of any discharge of indebtedness to which subparagraph (A) or (B) of section 108(a)(1) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] (relating to exclusion from gross income), as amended by section 2, applies and which occurs before January 1, 1982, or which occurs in a proceeding in a bankruptcy case or similar judicial proceedings commencing before January 1, 1982, then—

“(A) section 108(span)(2) of the such Code (relating to reduction of tax attributes), as so amended, shall be applied without regard to subparagraphs (A), (B), (C), and (E) thereof, and

“(B) the basis of any property shall not be reduced under section 1017 of such Code (relating to reduction in basis in connection with discharges of indebtedness), as so amended, below the fair market value of such property on the date the debt is discharged.

“(span)For Section 3 (Relating to Rules Relating to Title 11 Cases for Individuals).—The amendments made by section 3 [enacting sections 1398 and 1399 of this title and amending sections 443, 6012 and 6103 of this title] shall apply to any bankruptcy case commencing more than 90 days after the date of the enactment of this Act [Dec. 24, 1980].

“(c)For Section 4 (Relating to Corporate Reorganization Provisions).—

“(1)In general.—The amendments made by section 4 [enacting section 370 of this title and amending sections 354, 355, 357, 368 and 381 of this title] shall apply to any bankruptcy case or similar judicial proceeding commencing after December 31, 1980.

“(2)Exchanges of property for accrued interest.—The amendments made by subsection (e) of section 4 [amending sections 354 and 355 of this title] (relating to treatment of property attributable to accrued interest) shall also apply to any exchange—

“(A) which occurs after December 31, 1980, and

“(B) which does not occur in a bankruptcy case or similar judicial proceeding (or in a proceeding under the Bankruptcy Act) commenced on or before December 31, 1980.

“(d)For Section 5 (Relating to Miscellaneous Corporate Amendments).—

“(1)For subsection (a) (relating to exemption from personal holding company tax).—The amendments made by subsection (a) of section 5 [amending section 542 of this title] shall apply to any bankruptcy case or similar judicial proceeding commenced after December 31, 1980.

“(2)For subsection (span) (relating to repeal of special treatment for certain railroad redemptions).—The amendments made by subsection (span) of section 5 [amending section 302 of this title] shall apply to stock which is issued after December 31, 1980 (other than stock issued pursuant to a plan of reorganization approved on or before that date).

“(3)For subsection (c) (relating to application of 12-month liquidation rule).—The amendment made by subsection (c) of section 5 [amending section 337 of this title] shall apply to any bankruptcy case or similar judicial proceeding commenced after December 31, 1980.

“(4)For subsection (d) (relating to permitting bankruptcy estate to be subchapter s shareholder).—The amendment made by subsection (d) of section 5 [amending section 1371 of this title] shall apply to any bankruptcy case commenced on or after October 1, 1979.

“(5)For subsection (e) (relating to certain transfers to controlled corporations).—The amendments made by subsection (e) of section 5 [amending section 351 of this title] shall apply as provided in subsection (a) of this section.

“(6)For subsection (f) (relating to effect of debt discharge on earnings and profits).—The amendment made by subsection (f) of section 5 [amending section 312 of this title] shall apply as provided in subsection (a) of this section.

“(e)For Section 6 (Relating to Changes in Tax Procedures).—The amendments made by section 6 [enacting sections 6658 and 7464 of this title, amending sections 128, 354, 422, 1023, 3302, 6012, 6036, 6155, 6161, 6212, 6213, 6216, 6326 [now 6327], 6404, 6503, 6512, 6532, 6871, 6872, 6873, 7430, and 7508 of this title, repealing section 1018 of this title, and redesignating former section 7464 of this title as 7465] shall take effect on October 1, 1979, but shall not apply to any proceeding under the Bankruptcy Act [Title 11] commenced before October 1, 1979.

“(f)Election To Substitute September 30, 1979, for December 31, 1980.—

“(1)In general.—The debtor (or debtors) in a bankruptcy case or similar judicial proceeding may (with the approval of the court) elect to apply subsections (a), (c), and (d) by substituting ‘September 30, 1979’ for ‘December 31, 1980’ each place it appears in such subsections.

“(2)Effect of election.—Any election made under paragraph (1) with respect to any proceeding shall apply to all parties to the proceeding.

“(3)Revocation only with consent.—Any election under this subsection may be revoked only with the consent of the Secretary of the Treasury or his delegate.

“(4)Time and manner of election.—Any election under this subsection shall be made at such time, and in such manner, as the Secretary of the Treasury or his delegate may by regulations prescribe.

“(g)Definitions.—For purposes of this section—

“(1)Bankruptcy case.—The term ‘bankruptcy case’ means any case under title 11 of the United States Code (as recodified by Public Law 95–598).

“(2)Similar judicial proceeding.—The term ‘similar judicial proceeding’ means a receivership, foreclosure, or similar proceeding in a Federal or State court (as modified by section 368(a)(3)(D) of the Internal Revenue Code of 1986).”

Effective Date of 1976 Amendment

Amendment by section 1951(span)(2)(A) of Puspan. L. 94–455 applicable with respect to taxable years beginning after Dec. 31, 1976, see section 1951(d) of Puspan. L. 94–455, set out as a note under section 72 of this title.

Effective Date of 1960 Amendment

Puspan. L. 86–496, § 1(span), June 8, 1960, 74 Stat. 164, provided that: “The amendment made by subsection (a) [amending this section] shall apply to taxable years ending after December 31, 1959, but only with respect to discharges occurring after such date.”

Savings Provision

For provisions that nothing in amendment by section 11813 of Puspan. L. 101–508 be construed to affect treatment of certain transactions occurring, property acquired, or items of income, loss, deduction, or credit taken into account prior to Nov. 5, 1990, for purposes of determining liability for tax for periods ending after Nov. 5, 1990, see section 11821(span) of Puspan. L. 101–508, set out as a note under section 45K of this title.

Puspan. L. 94–455, title XIX, § 1951(span)(2)(B), Oct. 4, 1976, 90 Stat. 1837, provided that: “If any discharge, cancellation, or modification of indebtedness of a railroad corporation occurs in a taxable year beginning after December 31, 1976, pursuant to an order of a court in a proceeding referred to in section 108(span)(A) or (B) which commenced before January 1, 1960, then, notwithstanding the amendments made by subparagraph (A) [amending this section] the provisions of subsection (span) of section 108 shall be considered as not repealed with respect to such discharge, cancellation, or modification of indebtedness.”

Exclusion of Certain Cancellations of Indebtedness

Puspan. L. 107–134, title I, § 105, Jan. 23, 2002, 115 Stat. 2432, provided that:

“(a)In General.—For purposes of the Internal Revenue Code of 1986—

“(1) gross income shall not include any amount which (but for this section) would be includible in gross income by reason of the discharge (in whole or in part) of indebtedness of any taxpayer if the discharge is by reason of the death of an individual incurred as the result of the terrorist attacks against the United States on September 11, 2001, or as the result of illness incurred as a result of an attack involving anthrax occurring on or after September 11, 2001, and before January 1, 2002; and

“(2) return requirements under section 6050P of such Code shall not apply to any discharge described in paragraph (1).

“(span)Effective Date.—This section shall apply to discharges made on or after September 11, 2001, and before January 1, 2002.”

Plan Amendments Not Required Until January 1, 1989

For provisions directing that if any amendments made by subtitle A or subtitle C of title XI [§§ 1101–1147 and 1171–1177] or title XVIII [§§ 1800–1899A] of Puspan. L. 99–514 require an amendment to any plan, such plan amendment shall not be required to be made before the first plan year beginning on or after Jan. 1, 1989, see section 1140 of Puspan. L. 99–514, as amended, set out as a note under section 401 of this title.