11 U.S. Code § 523 - Exceptions to discharge | U.S. Code | US Law

26 U.S. Code § 108 – Income from discharge of indebtedness | U.S. Code | US Law

References in Text

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

The Higher Education Act of 1965, referred to in subsec. (f)(5)(A)(i), (ii), is Pub. L. 89–329, Nov. 8, 1965, 79 Stat. 1219. Part D of title IV of the Act is assessed usually to half D (§ 1087a et seq.) of subchapter IV of chapter 28 of Title 20, Education. Sections 437 and 464(c)(1)(F) of the Act are labeled to sections 1087 and 1087dd(c)(1)(F), respectively, of Title 20. For full classification of this Act to the Code, see part 1 of Pub. L. 89–329, set out as a Short Title notice underneath part 1001 of Title 20 and Tables.

Amendments

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

Subsec. (h)(2). Pub. L. 116–94, § 101(b), 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). Pub. L. 115–123 substituted “January 1, 2018” for “January 1, 2017” in two locations.

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

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

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

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

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

2010—Subsec. (f)(4). Pub. L. 111–148 amended par. (4) usually. Prior to modification, textual content learn 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). Pub. L. 111–5 added subsec. (i).

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

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

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

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

Subsec. (h). Pub. L. 110–142, § 2(b), added subsec. (h).

2004—Subsec. (e)(8). Pub. L. 108–357, § 896(a), amended heading and textual content of par. (8) usually. Prior to modification, textual content learn 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). Pub. L. 108–357, § 320(a), added par. (4).

2002—Subsec. (d)(7)(A). Pub. L. 107–147 inserted “, including by not taking into account under section 1366(a) any amount excluded under subsection (a) of this section” earlier than interval at finish.

1998—Subsec. (f)(2). Pub. L. 105–206, § 6004(f)(1), amended concluding provisions usually. Prior to modification, concluding provisions learn 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). Pub. 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). Pub. L. 105–34, § 225(a)(1), added subpar. (D) and concluding provisions and struck out former subpar. (D) which learn 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). Pub. L. 105–34, § 225(a)(1), struck out “or” at finish.

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

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

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

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

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Subsec. (a)(2)(B). Pub. L. 103–66, § 13150(c)(2), amended heading and textual content of subpar. (B) usually. Prior to modification, textual content learn as follows: “Subparagraph (C) of paragraph (1) shall not apply to a discharge to the extent the taxpayer is insolvent.”

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

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

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

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

Subsec. (b)(3)(B). Pub. L. 103–66, § 13226(b)(3)(A), amended heading and textual content of subpar. (B) usually. Prior to modification, textual content learn 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. (b)(4)(B). Pub. L. 103–66, § 13226(b)(3)(B), substituted “(D)” for “(C)” in heading and textual content.

Subsec. (b)(4)(C). Pub. L. 103–66, § 13226(b)(3)(C), substituted “(G)” for “(E)” in heading and textual content.

Subsec. (c). Pub. L. 103–66, § 13150(b), added subsec. (c).

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

Subsec. (d)(6), (7)(A). Pub. L. 103–66, § 13150(c)(3)(A), (C), substituted “Certain provisions” for “Subsections (a), (b) and (g)” in heading and “subsections (a), (b), (c), and (g)” for “subsections (a), (b), and (g)” in textual content.

Subsec. (d)(7)(B). Pub. L. 103–66, § 13150(c)(4), inserted at finish “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). Pub. L. 103–66, § 13150(c)(5), inserted “or under paragraph (3)(B) of subsection (c)” after “subsection (b)”.

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

Subsec. (e)(8). Pub. L. 103–66, § 13226(a)(1)(B), amended heading and textual content of par. (8) usually. Prior to modification, textual content learn as follows: “For functions of figuring out revenue of the debtor from discharge of indebtedness, the inventory for debt exception shall not apply—

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

“(B) with respect to an unsecured creditor, the place the ratio of the worth of the inventory obtained by such unsecured creditor to the quantity of his indebtedness cancelled or exchanged for inventory within the exercise is lower than 50 % of the same ratio computed for all unsecured collectors collaborating within the exercise.

Any inventory which is disqualified inventory (as outlined in paragraph (10)(B)(ii)) shall not be handled as inventory for functions of this paragraph.”

Subsec. (e)(10), (11). Pub. L. 103–66, § 13226(a)(1)(A), redesignated par. (11) as (10) and struck out former par. (10) which associated to satisfaction of indebtedness by switch of company’s inventory.

Subsec. (g)(3)(B). Pub. L. 103–66, § 13226(b)(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 earlier than interval at finish “and the attribute described in subparagraph (F) of subsection (b)(2) to the extent attributable to any passive activity credit carryover”.

1990—Subsec. (e)(8). Pub. L. 101–508, § 11325(b)(2), inserted provision at finish that any inventory which is a disqualified inventory, as so outlined, not be handled as inventory for functions of this paragraph.

Subsec. (e)(10)(B). Pub. L. 101–508, § 11325(b)(1), substituted heading for one which learn: “Exception for title 11 cases and insolvent debtors” and amended textual content usually. Prior to modification, textual content learn 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). Pub. L. 101–508, § 11325(a)(1), added par. (11).

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

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

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

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

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Subsec. (d). Pub. L. 100–647, § 1004(a)(6)(B), which directed modification of subsec. (d) heading by substituting “subsections (a), (b), and (g)” for “subsections (a), and (b)”, was executed by making the substitution for “subsections (a) and (b)” because the possible intent of Congress.

Subsec. (d)(6). Pub. L. 100–647, § 1004(a)(6)(A), (C), substituted “Subsections (a), (b), and (g)” for “Subsections (a) and (b)” in heading and “subsections (a), (b), and (g)” for “subsections (a) and (b)” in textual content.

Subsec. (d)(7)(A). Pub. L. 100–647, § 1004(a)(6)(A), (C), substituted “Subsections (a), (b), and (g)” for “Subsections (a) and (b)” in heading and “subsections (a), (b), and (g)” for “subsections (a) and (b)” in textual content.

Subsec. (g). Pub. L. 100–647, § 1004(a)(4), substituted “indebtedness” for “indebtedness of solvent farmers” in heading and amended textual content usually. Prior to modification, textual content learn as follows:

“(1) In basic.—For functions of this part and part 1017, the discharge by a certified individual of certified farm indebtedness of a taxpayer who is just not bancrupt on the time of the discharge shall be handled in the identical method as if the discharge had occurred when the taxpayer was bancrupt.

“(2) Qualified farm indebtedness.—For functions of this subsection, indebtedness of a taxpayer shall be handled as certified farm indebtedness if—

“(A) such indebtedness was incurred instantly in reference to the operation by the taxpayer of the commerce or enterprise of farming, and

“(B) 50 % or extra of the typical annual gross receipts of the taxpayer for the three taxable years previous the taxable 12 months wherein the discharge of such indebtedness happens is attributable to the commerce or enterprise 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). Pub. L. 99–514, § 822(a), struck out subpar. (C) referring to exclusion from gross revenue if the indebtedness discharged is certified enterprise indebtedness.

Subsec. (a)(2). Pub. L. 99–514, § 822(b)(1), substituted “Subparagraph (B) of paragraph (1)” for “Subparagraphs (B) and (C) of paragraph (1)” in subpar. (A), struck out subpar. (A) designation and heading, and struck out subpar. (B) offering that insolvency exclusion takes priority over certified enterprise exclusion.

Subsec. (b)(2)(B). Pub. L. 99–514, § 231(d)(3)(D), substituted “General business credit” for “Research credit and general business credit” in heading and amended textual content, as amended by this Act (Pub. L. 99–514, § 1171(b)(4) (see beneath)), usually. Prior to modification, textual content learn as follows: “Any carryover to or from the taxable 12 months of a discharge of an quantity for functions of figuring out the quantity allowable as a credit underneath—

“(i) part 30 (referring to credit for growing analysis actions), or

“(ii) part 38 (referring to basic enterprise credit).

For functions of this subparagraph, there shall not be taken into consideration any portion of a carryover which is attributable to the worker inventory possession credit decided underneath part 41.”

Pub. L. 99–514, § 1171(b)(4), struck out final sentence which had been eradicated by the final modification of subpar. (B) by Pub. L. 99–514, § 231(d)(3)(D). See above.

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

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

Subsec. (c). Pub. L. 99–514, § 822(b)(2), struck out subsec. (c) referring to tax remedy of discharge of certified enterprise indebtedness.

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

Subsec. (d)(4). Pub. L. 99–514, § 822(b)(3)(A), struck out par. (4) referring to remedy of indebtedness as certified enterprise indebtedness.

Subsec. (d)(6), (7)(A). Pub. L. 99–514, § 822(b)(3)(B), struck out reference to subsec. (c) in heading and textual content.

Subsec. (d)(7)(B). Pub. L. 99–514, § 822(b)(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). Pub. L. 99–514, § 822(b)(3)(D), struck out “under paragraph (4) of this subsection or” after “An election”.

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

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

Subsec. (e)(7)(E), (F). Pub. 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). Pub. L. 99–514, § 621(e), repealed the modification by Pub. L. 98–369, § 59(b)(1), which had added subpar. (C) creating an exception for transfers in sure exercises of the satisfaction of indebtedness by company’s inventory. See 1984 Amendment notice beneath.

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

1984—Subsec. (b)(2)(B). Pub. L. 98–369, § 474(r)(5), substituted provisions referring to analysis credit and basic enterprise credit overlaying carryovers to or from the taxable 12 months of a discharge of an quantity for functions of figuring out the quantity allowable as a credit underneath part 30 (referring to credit for growing analysis actions), or part 38 (referring to basic enterprise credit), and directing that there shall not be taken into consideration any portion of a carryover which is attributable to the worker inventory possession credit decided underneath part 41 for former provisions overlaying carryovers to or from the taxable 12 months of the discharge of an quantity for functions of figuring out the quantity of a credit allowable underneath part 38 (referring to funding in sure depreciable property), part 40 (referring to bills of labor incentive applications), part 44B (referring to credit for employment of sure new workers), part 44E (referring to alcohol used as a gas), or part 44F (referring to credit for growing analysis actions), and directing that, for functions of clause (i), there couldn’t be taken into consideration any portion of a carryover which was attributable to the worker plan credit (inside the that means of part 48(o)(3)).

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

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

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

Subsec. (e)(10)(C). Pub. L. 98–369, § 59(b)(1), which added subpar. (C), efficient as if included within the amendments made by part 806(e) and (f) of Pub. L. 94–455, was repealed by Pub. L. 99–514, § 621(e), (f)(2), eff. Jan. 1, 1986, with sure exceptions, see Effective Date of 1986 Amendment notice beneath.

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

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

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

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

1980—Pub. L. 96–589 utterly revised and expanded provisions by specifying the forms of indebtedness and by setting out priorities among the many exclusions, to mirror the revision of Title 11, Bankruptcy, in 1978.

1976—Pub. L. 94–455, § 1951(b)(2)(A), struck out “(a) Special rule of exclusion.—” after “Income from discharge of indebtedness” and struck out subsec. (b) which associated to discharge, cancellation, or modification of indebtedness of sure railroad firms.

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

1960—Subsec. (b). Pub. L. 86–496 supplied that if the discharge, cancellation, or modification of any indebtedness is effected pursuant to a court docket order in a receivership continuing or in a continuing underneath part 77 of the Bankruptcy Act, commenced earlier than Jan. 1, 1960, then no quantity is to be included in gross revenue with respect to it, and struck out provisions which made subsection inapplicable to discharges occurring in a taxable 12 months starting after Dec. 31, 1957.

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