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Androvett Blog

by Robert Tharp at 4:28:16 pm

Obama stimulus package offers tax breaks for cancelling debt
There's still lots to glean from the Obama stimulus package, but one potentially important tax break for business centers around the onerous tax implications when
lenders cancel a borrower's bad debt, says David Wheat, a tax attorney with Dallas' Thompson & Knight. Previously, the borrowers still faced significant tax hickies based on the outstanding amount owed on the loan. Under the stimulus package, the tax liability of having debt cancelled could be deferred. "Because of this, many struggling companies that have not yet reached insolvency or bankruptcy faced hefty tax consequences when they could least afford it," Wheat says. "Now businesses can elect to push back taxation of that income to a five-year period between 2014 and 2018. If eligible, this can help a company work out loans and negotiate discounted payoffs without facing short-term tax obligations." To interview Mr. Wheat about Cancellation of Debt issues, contact Barry Pound at 800-559-4534 or barry@androvett.com.