RS 53.2 - Exclusion from gross income; income from discharge of indebtedness
Special Rule of Exclusion.--No amount shall be included in gross income by reason of the discharge, in whole or in part, within the taxable year, of any indebtedness for which the taxpayer is liable, or subject to which the taxpayer holds property, if--
(1) the indebtedness was incurred or assumed--
(a) by a corporation, or
(b) by an individual in connection with property used in his trade or business, and
(2) such taxpayer makes and files a consent to the regulations prescribed under R.S. 47:156C (relating to adjustment of basis) then in effect at such time and in such manner as the collector of revenue by regulations prescribes.
In such case, the amount of any income of such taxpayer attributable to any unamortized premium (computed as of the first day of the taxable year in which such discharge occurred) with respect to such indebtedness shall not be included in gross income, and the amount of the deduction attributable to any unamortized discount (computed as of the first day of the taxable year in which such discharge occurred) with respect to such indebtedness shall not be allowed as a deduction.
Added by Acts 1956, No. 433, §1.