“To amend the Internal Revenue Code of 1986 to exclude certain discharges of indebtedness secured by real property from income.”
No CRS summary available for this bill.
This section establishes a new exclusion from gross income under IRC §108(a)(1) for the discharge of qualified commercial or retail indebtedness occurring on or after December 31, 2023. Qualified commercial or retail indebtedness means indebtedness that (1) was incurred or assumed before March 1, 2023, (2) is discharged during the period beginning December 31, 2023, and ending January 1, 2028, and (3) is secured directly or indirectly by specified real property—i.e., real property used in the taxpayer's trade or business, excluding residential rental property and property financed by tax-exempt bonds—at all times from incurrence or assumption to discharge. The exclusion coordinates with the tax attribute reduction rules of IRC §108(b) (e.g., reductions in net operating losses, basis, and credits). (As background, IRC §108 generally excludes specified categories of cancelled indebtedness from gross income to avoid taxing debt forgiveness in certain economic distress scenarios.)