What is ‘Tax Attribute’
A type of loss or tax credit that must be reduced as a result of the exclusion of debt cancellation from a taxpayer’s gross income. Tax attributes are adjusted when a taxpayer declares bankruptcy.
Tax attributes include net operating losses and carryovers, general business credit carryovers, alternative minimum tax credit carryovers, capital loss and foreign tax credit carryovers.
Explaining ‘Tax Attribute’
Taxpayers who are forgiven debts as a result of bankruptcy do not have to include the forgiven debt as income, but certain tax attributes must be reduced by an amount proportionate to the amount of debt that has been forgiven.
For example, if $5,000 in debt was forgiven, then the taxpayer could elect to have the basis of his/her rental property reduced by $5,000 and defer the tax until the property is sold. If the property is sold for a gain, then $5,000 of that gain will be taxed as ordinary income.
Further Reading
- Tax attributes as determinants of shareholder gains in corporate acquisitions – www.sciencedirect.com [PDF]
- Taxation and corporate financial policy – www.sciencedirect.com [PDF]
- The effect of financial statement classification of hybrid financial instruments on financial analysts' stock price judgments – www.jstor.org [PDF]
- Corporate governance, incentives, and tax avoidance – www.sciencedirect.com [PDF]
- The incentives for tax planning – www.sciencedirect.com [PDF]
- An evaluation of alternative measures of corporate tax rates – www.sciencedirect.com [PDF]
- Fiscal paradise: Foreign tax havens and American business – academic.oup.com [PDF]
- The impact of personal taxes on corporate dividend policy and capital structure decisions – www.jstor.org [PDF]
- The effect of taxes on the structure of corporate acquisitions – www.jstor.org [PDF]
- Effect of tax avoidance and tax evasion on personal income tax administration in Nigeria – www.worldscholars.org [PDF]
