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Bankruptcy and Insolvency Taxation, 4th Edition by Robert Liquerman, Grant W. Newton

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APPENDIX B

Senate Report No. 96-1035 on H.R. 5043—Bankruptcy Tax Act of 1980

Report of the Committee on Finance, United States Senate on H.R. 5043

§ I. Summary 2

A. Tax Treatment of Discharge of Indebtedness 2

B. Bankruptcy Estate of an Individual 5

C. Corporate Reorganizations in Bankruptcy 6

D. Miscellaneous Corporate Amendments 6

E. Changes in Tax Procedures 7

§ II. Explanation of the Bill 8

A. Tax Treatment of Discharge of Indebtedness 8

B. Rules Relating to Title 11 Cases for Individuals 23

1. Debtor and bankruptcy estate as separate entities 24

2. Debtor’s election to close taxable year 25

3. Computation of bankruptcy estate’s tax liability 27

4. Computation of individual’s tax liability 29

5. Technical amendment 31

6. Effective date 31

C. Corporate Reorganization Provisions 31

D. Miscellaneous Corporate Amendments 37

1. Exception from personal holding company status 37

2. Repeal of special treatment for certain railroad stock redemptions 38

3. Application of section 337 liquidation rule to corporations in bankruptcy 39

4. Estate of individual in bankruptcy as subchapter S shareholder 40

5. Certain transfers to controlled corporations 40

6. Effect of discharge of indebtedness on earnings and profits 42

E. Changes in Tax Procedures 42

1. Coordination with bankruptcy court procedures 42

2. Relief from certain failures to pay tax when due 47

3. Preservation of FUTA credit 48

4. Repeal of deadwood provision 48

5. Technical and conforming amendments 49

6. Effective date for provisions ...

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