Tax Relief for Debt Forgiveness Income

February 18, 2009
The American Recovery and Reinvestment Act signed into law on February 17 provides relief for taxpayers from so-called “cancellation of debt” income. The Act will provide substantial relief for many businesses struggling with excessive debt burdens as well as opportunities for investors seeking high yields (or control positions) in the distressed debt markets. This update provides a brief primer on the cancellation of debt income rules and summarizes the Act’s relief provision.