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Article by John Hackney and Jasen Hanson on “Is Debt Relief Really Just a Debtor’s Prison? Federal Tax Consequences of Debt Relief”
In an article published on October 28, 2020 in Bloomberg Tax, Atlanta-based Chamberlain Hrdlicka Shareholder John Hackney and Associate Jasen Hanson discuss the different COVID-19 debt relief measures that are intended to help struggling businesses and individuals.
“COVID-19 continues to wreak havoc on the world and slows efforts to reopen economies. Businesses and individuals have seen limited relief through expanded Small Business Association (SBA) loan programs, Paycheck Protection Program (PPP) loans, payroll tax deferral, and $1,200 stimulus checks,” explain Hackney and Hanson.
Hackney and Hanson further explain that businesses and individuals face a number of obstacles to regain the benefits of the economy. While debt relief in the form of restructured loans, foreclosures and outright loan forgiveness programs may provide additional help to struggling taxpayers, such programs may result in negative tax consequences.
“Without proper guidance, debt relief can become a debtor’s prison,” said Hackney and Hanson. “However, Section 108 provides important exceptions that may bail out underwater taxpayers. Taxpayers need to consult with experienced tax professionals to analyze the tax consequences of debt relief.”
To read the text of the article click here and to view the article on Bloomberg Tax click here.