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Question

What are the different types of Section 108(i) elections?

Answer

There are 3 different types of Section 108(i) elections.

• Initial - Filed for the tax year you are electing to defer the cancellation of debt income arising from debt discharged by the reacquisition of a debt instrument.
• Protective - Filed for each debt instrument that does not result in the realization of cancellation of debt income in the current taxable year, but would be within the scope of Revenue Procedure 2009-37 if the original conclusion were incorrect.
• Annual - Filed for each year following the taxable year the initial election was made until all items deferred under Section 108(i) have been recognized.

Related topic: 1120-US: Deferring cancellation of debt income under Section 108(i) FAQs

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