Tag Archive for Revenue Procedure 2014-20

IRS Determines That Debt Secured By Wholely Owned Dissregarded Entity Qualifies For Income Exclusion on Workout

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The Internal Revenue Service has issue Revenue Procedure 2014-20 which provides a safe harbor under which the IRS will, under certain defined circumstances, treat indebtedness that is secured by 100 percent of the ownership interest in a disregarded entity that holds real property as indebtedness that is secured by real property for purposes of § 108(c)(3)(A) of the Internal Revenue Code.

This revenue procedure will assist taxpayers with so-called “mezzanine” financing in workouts and similar circumstances.

Often borrowers incur debt in connection with real property used in a trade or business. If the debt is later discharged, the income from the discharge of indebtedness may be Read more