Ninth Circuit reverses Tax Court on timing of DOI income
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In Milenbach, 318 F3d 924 (9th Cir. 2003), aff’g in part and rev’g and remd’g in part 106 TC 184 (1996), the Ninth Circuit reversed a Tax Court decision on when discharge of debtedness (DOI) income occurred. Although the decision addressed a number of issues, this item focuses exclusively on the DOI income aspects of the case. Overview Sec. 61(a)(12) includes in gross income “income from discharge of indebtedness” which is income that arises when a creditor releases a debtor from an obligation incurred at the outset of the debtor-creditor relationship. The Supreme Court articulated this principle in Centennial Savings Bank FSB, 499 US 573 (1991) and held that the imposition of early withdrawal penalties on certificates of deposits (CDs) was not the discharge of the bank’s obligation to repay. When customers deposited money with the bank and Source : accessmylibrary.com |