Taxctfl wrote:I have a lot of questions about Section 108.
The first is: does/can Section 108 apply to a foreign corporation filing an 1120-F? Specifically for insolvency exclusions.
Another: are there any related party provisions? For example - company A & B are both owned by the same person. if company A owes company B $10mil and company B wants to take the bad debt write off but company A doesn’t want to take it into income then - can section 108 income exclusion apply due to insolvency if all the boxes are ticked…even though these are related parties? Both are US S corps in this instance.
You seem to say that company A, owned by your client, owes company B, which is also owned by your client, 10 million. Are there any loan papers for the 10 million loan and subsequent interest payments on the 10 million that company A loaned to company B?
If one person has 2 companies and loans 10 million from company A to company B ... where did the 10 million go? Are there records of payments for equipment or anything else that used up the 10 million dollar loan company A granted to company B?
Do you have proof that company A had 10 millions in their bank account which could be loaned out? I assume you do.