Ch. 28 - Financially Troubled Businesses

Question 1

Debt Forgiveness - Use of Loss Carryovers

Answer 1

1. NCL excluding farm losses and ABILs
2. Farm losses
3. Restricted farm losses
4. ABILS
5. Net capital losses

Question 2

Debt Forgiveness - Exceptions

Answer 2

• does not apply to personal debt

- does not apply to loans to employees or shareholders

Question 3

Debt Forgiveness - Unpaid Amounts

Answer 3

• Amounts unpaid for deductible outlays or expenses two years after YE are required to be added back to income
• These amounts cannot deducted if paid later