Good News. IRS Provides Safe Harbor for Taxpayers with Discharged Debts for Real Property

Washington, D.C. (February 7, 2014)

By Michael Cohn

The Internal Revenue Service has issued a revenue procedure to help taxpayers with so-called “mezzanine” financing in workouts and similar circumstances when they have debts that have been discharged in connection with real property.

Revenue Procedure 2014-20 provides a safe harbor under which the IRS will, under certain defined circumstances, treat indebtedness that is secured by 100 percent of the ownership interest in a disregarded entity that holds real property as indebtedness that is secured by real property for purposes of Section 108(c)(3)(A) of the Tax Code. The revenue procedure will assist taxpayers with mezzanine financing in workouts and similar circumstances.

The IRS noted that borrowers will often incur debt in connection with real property used in a trade or business. If the debt is later discharged, the income from the discharge of indebtedness may be excluded from gross income if certain requirements are met. In some cases, the real property is held by the borrower in an entity that is wholly owned by the borrower, and is, for federal tax purposes, disregarded as an entity separate from its owner. In these cases, the debt may be secured by the borrower’s ownership interest in the disregarded entity holding the real property.

Revenue Procedure 2014-20, will be included in Internal Revenue Bulletin 2014-09 on Feb. 24, 2014.

How Six Figure Income Taxpayers Lower Their Taxes Each Year

The problem of earning too much money and having to pay high taxes every year is no fun and gets old fast.  The first couple years can be exciting, however when reality sets in on how much you are paying in taxes, you quickly develop a whole new attitude.

No one wants to work hard, or not, and earn big money only to have 25% of it taken in taxes because they don't have write offs.  And big time tax attorneys charge you big bucks per hour to analyze your tax situation and implement legal tax reductions. 

One sure way a six figure wage or business owner can reduce his personal tax liability is by using real property.  The e-Book "The Schedule E Tax Loophole" goes a long way in helping taxpayers understand how the big boys use real property as a tax shelter.  The keyword is "DEPRECIATION" and until you fully understand what this 12 letter word can do for you, you are missing one of the best tax shelters available for the lower high income taxpayer. 

The reason this tax loophole is only good for the lower high income taxpayer is because the limit is $25,000 per year!  If you are a 7 figure income taxpayer, you'll need a lot more than the Schedule E Tax Loophole to get the tax breaks you need. 

The E-Book not only explains the numbers using an easy to understand format, it also shows you how to make the art of owning rel property, for the sake of lowering your taxes, easy and comfortable for you life style.