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| vol 18, num 2 | August 2023 |
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| Modifying Terms of Loans Can Have Unexpected Income Tax Consequences |
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Richard D. Liebman
BDO LLP
Highland Park, Ill. |
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A Periodic Discussion of Tax Topics for Bankruptcy Attorneys
Generally, an exchange of one property for another is a taxable event for the parties to the exchange. This general principle can apply when the terms of a debt instrument are modified by an agreement of the creditor and debtor or by court order in a bankruptcy. In certain cases, changes to the terms of a loan are considered to be significant enough (referred to as a significant modification) for the modified loan to be treated as a new loan that is exchanged for the original loan. This is commonly referred to as a “deemed exchange” because an actual exchange did not occur.
A modification of a debt instrument raises two key tax considerations:
- Is the modification of terms significant enough for the tax law to regard the modified debt as new debt that has been exchanged for the original debt (i.e., a deemed exchange)?
- If so, what are the income tax consequences of the deemed exchange of debt?
This article provides a general overview of the answers to both questions.
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| UCC Article 12: Controllable Electronic Records (CER) |
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Tuesday, October 24, 2023 | 12:00-1:15 PM EDT
Hosted by ABI's Commercial and Regulatory Law Committee
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| This webinar will discuss new Article 12 of the Uniform Commercial Code (UCC) — Controllable Electronic Records (CERs) — and the new rules that apply, such as how to perfect security interests in CERs and the negotiability of CERs, as well as updates to other articles of the UCC, including Articles 1, 8 and 9. The faculty will present real-world applications, as well as hypothetical Article 12 transactions. |
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