“COD” Income and the IRS

By Gerard T. Forge’t III JD, MBA, LLM

Proper and appropriate tax planning, has everything to do with timing. This is especially true in bankruptcy proceedings. An effective tax attribute (e.g. “Net Operating Loss”) can be utilized to offset income if the timing of each coincides. One such type of income (especially in a bankruptcy proceeding) is “COD” or “Cancellation of Debt” income. The issue in a bankruptcy proceeding revolves around the timing of recognition for income tax purposes. In a recently released IRS Private Letter Ruling, the IRS discusses the timing of “COD” income in a bankruptcy proceeding.



Gerard T. Forget III JD, MBA, LLM is an attorney in private practice in Omaha, Nebraska. His area of focus includes tax issues for individuals and small businesses. This includes IRS Audit and IRS Collection cases; both in formal bankruptcy proceedings and “informal workouts.” He is a member of the U.S. Tax Court and is licensed in the State of Nebraska. He received a J.D./M.B.A. from Creighton University School of Law, and an LL.M. in Taxation from University of Missouri – Kansas City. Mr. Forgét has advised and served on numerous Non-Profit and For-Profit Boards. Prior to starting in private practice, he was an Intern at the IRS where he assisted in litigating several U.S. Tax Court cases.

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