Accountants and financial managers are often the first professionals to realize that a financial problem exists within a corporation but must be familiar with the various alternatives available to clients before they can offer solutions. Completely updated, Bankruptcy and Insolvency Accounting, Seventh Edition, Volume 1 provides detailed information on SOP 90-7 and FASB statements 141, 142, and 144 and revisions made in CSSR 93-1 by CSSR 03-1. The process of corporate restructuring is thoroughly described for controllers, CEOs, CFOs and CPAs with small businesses as clients.
By:
Grant W. Newton (Pepperdine University)
Imprint: John Wiley & Sons Inc
Country of Publication: United States
Edition: 7th edition
Dimensions:
Height: 252mm,
Width: 180mm,
Spine: 38mm
Weight: 1.542kg
ISBN: 9780471787617
ISBN 10: 0471787612
Pages: 936
Publication Date: 02 November 2009
Audience:
Professional and scholarly
,
Undergraduate
Format: Hardback
Publisher's Status: Active
Preface xxxv Acknowledgments xxxix About the Author xli PART ONE BANKRUPTCY AND INSOLVENCY ENVIRONMENT 1 1 Accountant’s and Financial Advisor’s Role in Perspective, 3 1.1 Introduction, 3 1.2 Scope of Coverage, 4 Accounting Services, 5 1.3 Need for Financial Advisor’s Services, 5 1.4 Financial Advisor Defined, 6 Topical Overview, 7 1.5 Economic Causes of Business Failure, 7 1.6 Business Turnaround, 7 1.7 Alternatives Available to a Financially Troubled Business, 7 1.8 Comparison of Title 11 of the United States Code with the Bankruptcy Act, 11 1.9 Retention of the Financial Advisor and Fees, 13 1.10 Accounting Services, 14 1.11 Special Investigation and Financial Reporting, 14 1.12 Tax Awareness, 14 Responsibilities of Independent Accountant, 15 1.13 Responsibilities in General, 15 1.14 Observation of Business Decline, 15 1.15 Responsibility to Client, 16 1.16 Advice on Selection of Attorneys, 17 1.17 Other Steps to “Manage” the Proceedings, 18 Professional Certification, 18 1.18 Certified Insolvency and Restructuring Advisors, 18 1.19 Certification in Distressed Business Valuation, 20 2 Economic Causes of Business Failures, 21 2.1 Introduction, 21 Definition of Successful and Unsuccessful Business, 21 2.2 Failure Defined, 21 2.3 Business Failure Statistics, 23 Causes of Financial Difficulty, 24 2.4 Introduction, 24 2.5 Size of Business Failures, 26 2.6 Geographic Distribution of Business Failures, 29 2.7 Age of Business Failures, 30 2.8 Business Failures and Economic Conditions, 30 2.9 Characteristics of the Economic System, 33 2.10 Casualties, 34 2.11 Inside Underlying Causes, 34 2.12 Dishonesty and Fraud: Planned Bankruptcies, Sham, 42 2.13 Other External Causes, 42 Stages of Financial Failure, 43 2.14 Introduction, 43 2.15 Period of Incubation, 44 2.16 Cash Shortage, 45 2.17 Financial or Commercial Insolvency (Equity Definition), 45 2.18 Total Insolvency (Bankruptcy Definition), 45 2.19 Bankruptcy or Out-of-Court Workout, 45 Detection of Failure Tendencies, 46 2.20 Introduction, 46 2.21 Trend Analysis, 46 2.22 Analysis of Accounting Measures, 48 2.23 Analysis of Management, 64 2.24 Importance of Forecasts, 64 2.25 Other Factors, 65 PART TWO LEGAL ASPECTS OF BANKRUPTCY AND INSOLVENCY PROCEEDINGS 67 3 Turnaround Process, 69 3.1 Objectives, 69 Stages of Turnaround Process, 69 3.2 Introduction, 69 3.3 Stage 1: Management Change, 71 3.4 Stage 2: Situation Analysis, 72 Competitive Ability, 77 3.5 Stage 3: Design and Selection of Turnaround Strategy, 78 3.6 Stage 4: Emergency Action Stage, 81 3.7 Stage 5: Business Restructuring Stage, 87 3.8 Stage 6: Return-to-Normal Stage, 89 Characteristics of Effective Turnaround Managers, 90 3.9 Introduction, 90 3.10 Organizational Leader, 91 3.11 Ability to Develop and Implement Strategy, 91 3.12 Entrepreneurial Instincts, 91 3.13 “Hands-On” Operating Experience, 91 3.14 Effective Negotiating Skills, 92 3.15 Good Interviewing Skills, 92 3.16 Action Orientation, 92 3.17 Trustworthiness and Fairness, 93 Techniques Used in Business Turnarounds, 94 3.18 Introduction, 94 3.19 Lean Manufacturing, 94 3.20 Activity-Based Costing, 98 3.21 Retail Store “Four-Wall” Analysis, 102 3.22 Business Process Reengineering, 108 Summary and Recommendations, 109 3.23 Summary, 109 4 Nonbankruptcy Proceedings, 111 4.1 Introduction, 111 Out-of-Court Settlements, 111 4.2 Nature of Proceedings, 111 4.3 Importance of an Early Meeting Date, 113 4.4 Preparation for the Creditors’ Meeting, 113 4.5 Appointment of Creditors’ Committee, 114 4.6 Duties and Functions of Creditors’ Committee, 115 4.7 Interim Management, 116 4.8 Committee Management, 116 Preparation of a Plan of Settlement, 118 4.9 Introduction, 118 4.10 Conditions of Agreement, 119 4.11 Out-of-Court Agreement Prior to Chapter 11 (Prepackaged Bankruptcy), 120 Advantages and Disadvantages, 121 4.12 Advantages, 121 4.13 Disadvantages, 121 Assignment for the Benefit of Creditors (State Court), 122 4.14 Introduction, 123 4.15 Duties, Functions, and Procedures of Assignee, 122 4.16 Discharge of Debts, 123 4.17 Advantages, 124 4.18 Disadvantages, 125 5 Nature of Bankruptcy and Insolvency Proceedings, 127 Origin, 127 5.1 Introduction, 127 5.2 United States, 128 5.3 Insolvency and Bankruptcy Laws Today, 130 5.4 Current Bankruptcy Statistics, 132 Nature of Insolvency, 134 5.5 Types of Insolvency, 134 5.6 Equity versus Bankruptcy Meanings of Insolvency, 135 5.7 Determination of Assets and Liabilities, 135 5.8 Valuation of Assets, 136 5.9 Insolvency and the Bankruptcy Code, 136 5.10 Should There Be a Threshold Test?, 137 5.11 Alternatives Available to a Financially Troubled Business, 139 Assignment for the Benefit of Creditors (State Court), 140 5.12 Introduction, 140 5.13 Duties, Functions, and Procedures of Assignee, 140 5.14 Discharge of Debts, 141 5.15 Advantages, 142 5.16 Disadvantages, 142 Provisions Common to all Proceedings, 143 5.17 Introduction, 143 5.18 Bankruptcy Courts, 144 5.19 U.S. Trustee, 146 5.20 Sovereign Immunity, 149 5.21 Commencement of Cases, 154 5.22 Filing and Quarterly Fees, 156 5.23 Partnership, 157 5.24 Meeting of Creditors, 158 5.25 Meeting of Equity Security Holders, 159 5.26 Adequate Protection, 159 5.27 Automatic Stay, 164 5.28 Use of the Estate’s Property, 174 5.29 Executory Contracts and Leases, 175 5.30 Utility Service, 193 5.31 Allowance of Claims or Interests, 196 5.32 Expense of Administration, 202 5.33 Priorities, 205 5.34 Exemptions, 207 5.35 Discharge of Debts, 211 5.36 Property of the Estate, 213 5.37 Avoiding Power of Trustee, 220 5.38 Reclamation and 503(b)(9) Claim, 222 5.39 Preferences, 226 5.40 Fraudulent Transfers, 249 5.41 Postpetition Transfers, 258 5.42 Postpetition Effect of Security Interest, 259 5.43 Setoffs, 260 Chapter 7 Liquidation, 263 5.44 Filing the Petition, 263 5.45 Trustee, 264 5.46 Creditors’ Committee, 266 5.47 Partnerships, 267 5.48 Treatment of Tax Liens, 269 5.49 Liquidation of Assets, 269 5.50 Discharge, 271 5.51 Discharge of Environmental Claims, 278 SIPC Liquidation, 278 5.52 Introduction, 278 5.53 Determination of Need of Protection, 279 5.54 Appointment of Trustee, 280 5.55 Court Jurisdiction, 280 5.56 Powers and Duties of Trustee, 283 5.57 Satisfaction of Claims, 284 5.58 Prohibited Acts, 286 5.59 Role of Securities and Exchange Commission, 287 5.60 Compensation in an SIPA Action, 288 6 Rehabilitation Proceedings Under the Bankruptcy Code, 289 6.1 Introduction, 289 6.2 Purpose of Chapter 11, 289 Operating Under Chapter 11, 290 6.3 Role of the Court and U.S. Trustee, 290 6.4 KERPs, 292 6.5 Consolidation of Chapter 11 Petitions, 296 6.6 Creditors’ and Equity Holders’ Committees, 302 6.7 Appointment or Election of Trustee, 309 6.8 Appointment of Examiner, 314 6.9 Operation of the Business, 318 6.10 Automatic Stay, 319 6.11 Impact of Timbers, 319 6.12 Use of Collateral, 320 6.13 Use of Cash Collateral, 320 6.14 Obtaining Credit, 322 6.15 Claims and Interests, 330 6.16 Special Provisions for Partially Secured Creditors, 340 Developing the Plan, 342 6.17 Negotiating a Chapter 11 Plan, 343 6.18 Exclusivity Period, 344 6.21 Secured Claim Classification, 356 6.22 Interest Classification, 357 6.23 Content of the Plan, 357 6.24 Permissible Provisions, 359 6.25 Impairment of Claims, 361 6.26 Disclosure Statement, 364 6.27 Modification of the Plan, 373 Confirmation of the Plan, 375 6.28 Acceptance of the Plan, 375 6.29 Confirmation Hearing, 375 6.30 Confirmation Requirements, 376 6.31 Best Interest of Creditors, 378 6.32 Priority Treatment, 379 6.33 Feasibility, 381 6.34 Cramdown, 385 6.35 Chapter 11 Cases Filed by Individuals, 394 Postconfirmation, 397 6.36 Impact, 397 6.37 Distribution, 400 6.38 Discharge of Debts, 401 6.39 Postconfirmation Recovery, 401 6.40 Securities Law Exemption, 402 6.41 Final Decree, 404 6.42 Conversion to Chapter 7 or Dismissal, 405 6.43 Advantages and Disadvantages of Chapter 11, 407 Chapter 12: Adjustment of Debts of a Family Farmer with Regular Annual Income, 407 6.44 Purpose, 407 6.45 Requirements for Use, 408 6.46 Operation of Farm, 408 6.47 Chapter 12 Plan, 409 Chapter 13: Adjustment of Debts of an Individual with Regular Income, 411 6.48 Nature, 411 6.49 Filing of Petition, 411 6.50 Operation of Business, 413 6.51 The Plan, 413 6.52 Discharge of Debts, 417 6.53 Use of Chapter 13 by Business, 418 6.54 Chapter 15: Ancillary and Other Cross Border Cases, 419 7 Retention of the Financial Advisor and Fees, 427 7.1 Introduction, 427 Retention of the Financial Advisor, 428 7.2 The Accountant or Financial Advisor’s Role in the Proceedings, 428 7.3 Obtaining the Engagement, 428 7.4 Retention Procedure, 429 7.5 Creditors’ Committee, 432 7.6 Source of Payment, 433 7.7 Affidavit of Proposed Financial Advisor, 434 7.8 Survey of Work to Be Performed, 440 7.9 Application for Retention, 441 7.10 Retention Order, 444 7.11 Retention on a Retainer Basis, 444 7.12 Deviations from Retention Order, 445 7.13 Accountants as Consultants or Financial Advisors, 445 7.14 Prepetition Retention, 446 7.15 Retention Procedure—Informal, 446 7.16 Accountants as Quasi-Officers of the Court, 447 Determination of Financial Advisor’s Fees, 447 7.17 Introduction, 447 7.18 SEC May Object to Fees, 448 7.19 Compensation Reviewed by U.S. Trustee, 449 7.20 Compensation Must Be Approved by the Court, 449 7.21 Factors to Consider When Estimating Fees, 453 7.22 Compensation Based on Comparable Services, 458 7.23 Prepetition Fees, 460 Time Records, 461 7.24 Requirements, 461 Petition for Fee Allowance, 462 7.25 Court Discretion in Ruling on Fees, 462 7.26 Procedure for Filing the Petition, 465 7.27 Payment for Services Rendered, 466 8 Accounting and Financial Services for Debtors-in-Possession or Trustee, 469 Nature of Accounting Services, 469 8.1 Introduction, 469 8.2 Parties Retaining Accountants and Financial Advisors, 469 8.3 Summary of Services, 471 Prefiling Stage of Chapter Proceedings, 472 8.4 Importance of Early Meetings, 472 8.5 Advice on Selection of Counsel, 473 8.6 Conference with Attorney, 473 8.7 Determine Alternatives, 474 8.8 Prebankruptcy Planning, 475 Accounting/Financial Reporting Requirements, 481 8.9 Introduction, 481 8.10 Affidavits in Support of Petition, 483 8.11 Supporting Schedules, 484 8.12 Statement of Financial Affairs, 487 8.13 Monthly Reporting, 488 8.14 U.S. Trustee’s Requirements, 489 8.15 Operating Statements, 490 8.16 SEC Reporting in Chapter 11, 492 8.17 Bankruptcy Claims Management Process, 495 Formulation of a Plan of Reorganization, 499 8.18 Introduction, 499 8.19 Liquidation Value of Assets, 500 8.20 Projection of Future Operations, 501 8.21 Reorganization Value, 501 8.22 Pro Forma Balance Sheet, 502 8.23 Formulating an Amended Plan, 503 8.24 Disclosure Statement, 503 Accountant and Financial Advisor as Examiner, 504 8.25 Nature of Service, 504 Additional or Other Accounting Services, 505 8.26 Introduction, 505 8.27 Normal Accounting Services, 505 8.28 Special Investigation, 505 8.29 Accounting Services and the Granting of New Credit, 507 Professional Conduct of Accountants and Financial Advisors, 508 8.30 Introduction, 508 8.31 Personal Liability: Preparation of Financial Statements, 508 8.32 Professional Conduct of Debtor’s Accountant— Toward Client, 509 8.33 Professional Conduct of Debtor’s Accountant— Toward Creditors’ Accountant/Advisors, 510 8.34 Direct Liability to Third Parties, 511 8.35 Other Professional Ethical Factors, 511 9 Other Financial Advisory Services for Debtors-in-Possession or Trustee, 513 9.1 Introduction, 513 Management Advisory Services, 513 9.2 Introduction, 513 9.3 Long-Range Business Plan, 514 9.4 Financial Projections, 516 Interim Management Services, 516 9.5 Introduction, 516 9.6 Retention, 517 9.7 Billing, 517 Balloting and Noticing Agent Services, 517 9.8 Noticing Overview, 517 9.9 Solicitation Overview, 518 9.10 Pre-Balloting Services, 519 9.11 Plan Classes, 519 9.12 Solicitation Process, 520 9.13 Plan Information and Ballots, 520 Chapter 7 and Chapter 11 Liquidations, 521 9.14 Introduction, 521 9.15 Items Requiring Immediate Attention, 521 9.16 Performance of Audits and Other Special Investigations, 522 9.17 SIPC Liquidation, 522 Postconfirmation Services, 523 9.18 Overview, 523 9.19 Litigation Trusts, 523 9.20 Tort Trusts, 523 10 Accounting and Financial Services for the Creditors’ Committee, 525 Nature of Creditors’ Committee, 525 10.1 Introduction, 525 10.2 Creditors’ Committees, 526 10.3 Directing Committee Activities, 534 10.4 Data, 535 10.5 Bargaining Process, 535 10.6 Role of Creditors’ Financial Advisor in the Bargaining Process, 536 10.7 Form of Consideration, 537 Monitoring Debtor’s Activities, 537 10.8 Introduction, 537 10.9 Areas Requiring Immediate Attention, 537 10.10 Importance of Speed, 538 10.11 Establishment of Proper Controls, 539 10.12 Investigation of Causes of Failure and Development of Controls to Limit Further Impairment of Assets, 540 10.13 Review of Receipts and Disbursements Control, 540 10.14 Review of Debtor’s Accounting System, 541 10.15 “Insider” Problem, 542 10.16 Review of Weekly/Monthly Reporting, 544 Special Investigations and Reviews, 545 10.17 Investigation of Debtor’s Books and Records, 545 10.18 Review of Debtor’s Transactions, 546 10.19 Evaluation of Debtor’s Projections, 546 10.20 Review of Plan of Reorganization and Disclosure Statement, 547 Other Accounting Services, 550 10.21 Introduction, 550 10.22 Secured Creditor, 550 10.23 Major Stockholder or Equity Committee, 550 10.24 Responsibilities of Creditors’ Financial Advisor, 551 11 Valuation of a Business in Bankruptcy Proceedings, 553 Importance of Valuation, 553 11.1 Introduction, 553 11.2 Adequate Protection under Section 361, 554 11.3 Claims Determination, 558 11.4 Recovery Action, 561 11.5 Chapter 13 Secured Claims, 567 11.6 Determining Best Interest of Creditors and Stockholders under Chapter 11, 568 11.7 Determining Whether a Plan Is Fair and Equitable to a Dissenting Class in Chapter 11, 569 11.8 Determining Feasibility, 573 11.9 Codification of Value, 573 Liquidation Values, 575 11.10 Introduction, 575 11.11 Approaches, 577 Going-Concern (Reorganization) Valuation, 578 11.12 Introduction, 578 11.13 Cost of Capital, 579 11.14 Appraisal Value or Replacement Cost, 588 11.15 Market Value of Securities, 588 11.16 Income Approach (Discounted Cash Flows), 589 11.17 Market Approach, 596 11.18 Asset-Based (Cost) Approach, 607 11.19 Discounts and Premiums, 612 11.20 Synthesizing Results, 618 11.21 Determining Liabilities, 622 PART THREE INVESTIGATION AND REPORTS 12 Special Areas of Inquiry, 627 Nature of Investigation, 627 12.1 Introduction, 627 12.2 Objectives, 628 12.3 Balance Sheet Emphasis, 629 12.4 Modifications of Investigation, 629 Introduction to the Special Areas of Inquiry, 631 12.5 Irregularities, 631 12.6 Fraud, 633 12.7 Proof of Fraud, 634 12.8 Auditor’s Responsibility for the Detection of Irregularities, 634 12.9 Methods of Discovering Irregularities and Fraud, 640 Availability of Books and Records, 641 12.10 Locating and Obtaining Possession of the Records, 641 12.11 Scheduling the Books; Procedure Followed for Missing Records, 642 Fraudulent Transfers, 642 12.12 Transfer of Assets without Fair Consideration, 642 12.13 Sales of Assets Below Market Values, 643 12.14 Transfer of Assets to Insiders, Officers, Employees, Relatives, and Others, 643 Concealment of Assets, 648 12.15 Merchandise, 648 12.16 Cash Surrender Value of Officers’ Life Insurance Policies, 650 12.17 Deposits and Security, 651 12.18 Investments and Real Estate, 651 12.19 Machinery and Equipment, 652 False Entries and Statements, 652 12.20 Mutilation and Alteration of Records, 652 12.21 Concealment and Destruction of Records, 653 12.22 Forgery, 653 12.23 Issuance of False Statements, 653 Financing Irregularities, 657 12.24 Receivables, 657 12.25 Inventory, 659 Preferential Payments, 660 12.26 Introduction, 660 12.27 Recovery of Preferential Payments, 661 12.28 Search for Preferential Payments, 662 12.29 Inflated Claims, 663 Applicability of Generally Accepted Auditing Standards, 664 12.30 Auditing Standards, 664 12.31 Auditing Procedures, 665 12.32 Audit Program Guide, 666 13 Financial Reporting During Bankruptcy, 667 13.1 Introduction, 667 Form and Substance of Financial Statements, 668 13.2 Financial Data Required at the Date of Filing of Petition in Chapter 11, 668 13.3 Balance Sheet, 668 13.4 Rejected Leases, 677 13.5 Warranty Reserves and Similar Liabilities, 678 13.6 Pension Liability, 679 13.7 Pro Forma Statement of Financial Position, 681 13.8 Notes to Statements, 681 13.9 Statement of Operations, 682 13.10 Statement of Cash Flows, 687 13.11 Statement of Capital Deficiency, 689 13.12 Statement of Affairs, 689 13.13 Special-Purpose Statements, 693 Accounting for a Chapter 11 Filing, 694 13.14 Use of New Accounts, 694 13.15 Illustration of Entries, 696 13.16 Accrued Interest, 697 14 Reporting Results of the Plan, 699 14.1 Introduction, 699 Chapter 11, 699 14.2 Requirements for Fresh-Start Reporting, 699 14.3 Allocation of Reorganization Value, 701 14.4 Disclosures, 704 14.5 Recording the Adoption of Fresh-Start Reporting, 705 14.6 Deferred Taxes, 708 14.7 Disclosure Statement, 710 14.8 Subsequent Events and Preconfirmation Contingencies, 711 14.9 Reporting by Entities Not Qualifying for Fresh Start, 714 14.10 Comparison with Prior Periods, 714 Out-of-Court Workouts, 715 14.11 Introduction, 715 14.12 Debt Discharge under FASB Statement No. 15, 715 14.13 Reporting of Income from Debt Discharge When FASB Statement No. 15 Is Not Applicable, 723 14.14 Determining the Amount of Income from Debt Discharge When FASB Statement No. 15 Is Not Applicable, 724 Quasi-Reorganization, 724 14.15 Introduction, 724 14.16 Adjustment of Equity Section Only (“Mini Quasi”), 725 14.17 Adjustment of All Accounts, 726 14.18 Conditions Necessary for Quasi-Reorganization, 729 14.19 Quasi-Reorganization and the SEC, 729 15 Reporting on an Insolvent Company, 731 15.1 Introduction, 731 Litigation Services, 734 15.2 Application of Litigation Services to Bankruptcy, 734 15.3 Disclosure Requirements, 736 15.4 Operating Reports, 736 15.5 Investigative Services, 737 15.6 Financial Projections, 738 Accountant’s Report: Nonlitigation Services, 739 15.7 Introduction, 739 15.8 Limitations on Scope, 740 15.9 Unique Disclosures in Report, 741 15.10 Full Disclosure, 742 15.11 Accountant’s Responsibility for Disclosure, 743 Going-Concern Concept, 743 15.12 Introduction, 743 15.13 Going-Concern Concept Defined, 744 15.14 Absence of Evidence to the Contrary, 745 15.15 Auditor’s Responsibility for Evaluation, 746 15.16 Audit Procedures, 746 15.17 Consideration of Management’s Plans, 747 Types of Opinions, 748 15.18 Unqualified Opinion, 748 15.19 Qualified Opinion, 749 15.20 Disclaimer of Opinion, 750 15.21 Adverse Opinion, 750 15.22 Reports Relating to the Results of Applying Agreed-On Procedures, 751 Unaudited Financial Statements, 753 15.23 Introduction, 753 15.24 Public Entity Report, 753 15.25 Nonpublic Entity Reports, 756 Reporting on a Liquidation of the Debtor, 762 15.26 Introduction, 762 15.27 Single-Year Report, 763 15.28 Comparative Financial Statements, 764 15.29 Solvency Letters, 764 15.30 Reports on Prospective Financial Statements, 765 15.31 Liquidation Analysis, 765 16 Tax Awareness, 767 16.1 Introduction, 767 Notification of Proceedings and Filing of Returns, 767 16.2 Notice to Governmental Agencies, 767 16.3 Responsibility for Filing Income Tax Returns: Corporations, 768 16.4 Responsibility for Filing Income Tax Returns and Other Information Required by the Bankruptcy Court: Individual and Partnership, 769 Special Rules for Individuals, 774 16.5 Introduction, 774 16.6 Income and Deductions, 774 16.7 Transfers between Debtor and Estate, 775 16.8 Attribute Carryover to Estate, 778 16.9 Attribute Carryover to Debtor, 778 16.10 Carryback of Net Operating Losses and Other Credits Incurred Subsequent to Commencement of Case, 779 16.11 Administrative Expenses, 779 16.12 Change in Accounting Period, 782 Minimization of Tax and Related Payments, 782 16.13 Estimated Taxes, 782 16.14 Prior Year Taxes, 782 16.15 Pension Funding Requirements, 782 Treatment of Income During Bankruptcy Period, 782 16.16 Income Required to Be Reported, 782 16.17 Deductions Allowed, 783 16.18 Discharge of Debts, 784 16.19 Debt Discharge by Farmers, 788 16.20 Cancellation of Real Property Business Indebtedness, 789 16.21 Basis Adjustment, 790 16.22 Debt Discharge by Partnerships, 793 16.23 Debt Discharge by S Corporations, 793 16.24 Exchange of Stock for Debt, 793 16.25 Purchase-Money Debt Reduction, 794 16.26 Tax Planning, 794 Corporate Reorganizations, 794 16.27 Introduction, 794 16.28 Tax-Free G Reorganization, 795 16.29 Personal Holding Company, 797 Availability of New Operating Losses, 797 16.30 Introduction, 797 16.31 Section 382 Limitation, 798 16.32 Special Rules for Corporations in Bankruptcy, 799 16.33 Other Provisions, 800 Effects on Earnings and Profits, 801 16.34 Introduction, 801 16.35 Account Adjustment, 801 16.36 Earnings and Profits Carryover, 801 Administrative Aspects of Taxes, 802 16.37 Tax Priorities, 802 16.38 Tax Penalty, 809 16.39 Interest, 810 16.40 Erroneous Refunds or Credits, 810 16.41 Chapter 11 Reorganization, 810 16.42 Chapters 12 and 13 Adjustments, 811 16.43 Tax Discharge, 811 16.44 Tax Preferences, 813 16.45 Tax Procedures, 813 16.46 State and Local Tax Provisions, 814 Appendix: Statement of Position 815 Statutes Citations 849 Case Index 855 Name Index 865 Subject Index 867
Grant W. Newton, CPA, CIRA, CMA, is Professor of Accounting at the Graziadio School of Business and Management at Pepperdine University and is Executive Director of the Association of Insolvency and Restructuring Advisors. He is the author of Corporate Bankruptcy: Tools, Strategies, and Alternatives (2003) and Bankruptcy and Insolvency Taxation (2005), both from Wiley. His articles have appeared in a large number of professional periodicals. He received his PhD from New York University, Master's from the University of Alabama, and BS from the University of North Alabama.