Tax Warrior Chronicles

CAUTION: Restructuring Your Debt May Create Cancellation of Debt Income

Posted on Wed, Dec 09, 2020

By: Kyle Propsner, CPA, and Nastassja Markham Coletta, JD, LLM


Are you a business owner exploring new borrowings or the restructuring of current debt as a pathway to satisfy cash needs? Current economic conditions may present an opportunity to secure new borrowings at a discount or modify current debt with relaxed covenants, yields, terms, or rates. To avoid unforeseen tax consequences while restructuring debt, you should understand the various ways a debt instrument can be modified and the potential tax implications.

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