Examination of returns and claims for refund, credit or abatement; determination of correct tax liability
Revevenue Procedure 2009-37 provides guidance under Section 1231 of the American Recovery and Reinvestment Tax Act of 2009 that allows a taxpayer to defer recognizing cancellation of indebtedness (COD) income from the reacquisition of an applicable debt instrument in 2009 or 2010. An electing taxpayer defers the income for up to five taxable years and recognizes the income ratably over the next five taxable years. If a taxpayer makes the election and acquires the applicable debt instrument generating the COD income for a new debt instrument with original issue discount (OID), interest deductions for the OID generally also are deferred. The revenue procedure tells taxpayers the time and manner for making the election and includes specific procedures for partnerships, S corporations, tiered pass-through entities, and foreign entities.
Revenue Procedure 2009-37 will appear in Internal Revenue Bulletin 2009-36, dated Sept. 8, 2009.
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