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Borrowers Beware: Short Sales of Distressed Assets May Have Unfavorable Tax Consequences

March 23, 2021 By Jasper L. (Jack) Cummings, Jr. and Seth Buchwald

Beware of being shortsighted. Last week, our Federal Tax Group takes the long view for borrowers and their creditors seeking to use short sales to extricate themselves from nonrecourse debt.

  • What is a short sale?
  • Is the short sale one integrated transaction or two separate ones?
  • Two federal court cases tell the story

Read the full advisory here.

Filed Under: Federal Tax Advisory Tagged With: cancellation of indebtednes, CODI, covid-19, Fifth Circuit Court of Appeals, nonrecourse debt, Section 1001, Section 108, short sales, U.S. Tax Court

About Jasper L. (Jack) Cummings, Jr.

Jack Cummings is counsel in the Federal Tax Group of Alston & Bird in Raleigh and Washington, D.C. He served as IRS associate chief counsel (corporate) and chair of the Corporate Tax Committee of the ABA Section of Taxation.

[Read Bio]

About Seth Buchwald

Seth Buchwald is an associate in the Federal & International Tax Group. He uses his experience as a former certified public accountant (CPA) to understand and assist clients with their complex domestic and international tax planning and structuring issues.

[Read Bio]

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