PUBLIC LAW 96-589—DEC. 24, 1980
94 STAT. 3389
Public Law 96-589 96th Congress An Act To amend the Internal Revenue Code of 1954 to provide for the tax treatment of bankruptcy, insolvency, and similar proceedings, and for other purposes.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled.
Dec. 24, 1980 [H.R. 5043]
Bankruptcy Ts-X Act of*
SECTION 1. SHORT TITLE; TABLE OF CONTENTS; AMENDMENT OF 1954 1980. CODE. (a) SHORT TITLE.—This Act may be cited as the "Bankruptcy Tax 26 USC i note.
Act of 1980". (b) TABLE OF CONTENTS.— Sec. 1. Short title; table of contents; amendment of 1954 Code. Sec. 2. Tax treatment of discharge of indebtedness. Sec. 3. Rules relating to title 11 cases for individuals. Sec. 4. Corporate reorganization provisions. Sec. 5. Miscellaneous corporate amendments. Sec. 6. Changes in tax procedures. Sec. 7. Effective dates. (c) AMENDMENT OF 1954 CODE.—Except as otherwise expressly
26 USC i
provided, whenever in this Act an amendment or repeal is expressed ^^ *^9 in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1954. SEC. 2. TAX TREATMENT OF DISCHARGE OF INDEBTEDNESS.
(a) AMENDMENT OF SECTION 108.—Section 108 (relating to discharge of indebtedness) is amended to read as follows: "SEC. 108. INCOME FROM DISCHARGE OF INDEBTEDNESS.
26 USC 108.
"(a) EXCLUSION FROM GROSS INCOME.—
"(1) IN GENERAL.—Gross income does not include any amount which (but for this subsection) would be includible in gross income by reason of the discharge (in whole or in part) of indebtedness of the taxpayer if— "(A) the discharge occurs in a title 11 case, ii USC lOi "(B) the discharge occurs when the taxpayer is insolvent, ^^ ^^9or "(C) the indebtedness discharged is qualified business indebtedness. "(2) COORDINATION OF EXCLUSIONS.— "(A) TITLE i i EXCLUSION TAKES PRECEDENCE.—Subpara-
graphs (B) and (C) of paragraph (1) shall not apply to a discharge which occurs in a title 11 case. "(B) INSOLVENCY EXCLUSION TAKES PRECEDENCE OVER QUALIFIED BUSINESS EXCLUSION.—Subparagraph (C) of para-
graph (1) shall not apply to a discharge to the extent that the taxpayer is insolvent. "(3) INSOLVENCY EXCLUSION LIMITED TO AMOUNT OF INSOL-
VENCY.—In the case of a discharge to which paragraph (1)(B)
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