Balance Sheet Accounting Consultation For Tax Liability On Cancellation of Debt

Cancelled Posted 2 years ago Paid on delivery
Cancelled Paid on delivery

I have 2 questions that need answering

2021 I purchased full stocks and ownership of a C Corp in the US. The company had a debt on the balance sheet off around $99,000 to another company. When i purchased the company I paid the price to the existing 2 shareholders and it was also agreed that there would be a cancellation of debt and that they figured a deal with the company which then signed a document to me stating the debt was forgiven. The company that lended this amount is a foreign company incorporated overseas. Thus with my purchase the debt was cancelled in some sense on paper. From my research now i see that there that the c corp will be liable to income tax on this $99,000 cancellation called cancellation of debt income! so i want to see what to do to lower this or get rid of this. Also based on my research I found out about this:

"Purchase price adjustment

Sometimes a price agreement will be reached between buyer and seller, but for some reason both agree to reduce that price at a later date. A strict reading of the Internal Revenue Code says that the amount reduced is COD income, it does not fall under one of the four exclusions, and is thus gross income. To remedy this situation, Congress passed 26 U.S.C. § 108(e)(5), also known as the purchase price adjustment. If a reduction in price occurs after the parties have already reached an agreement, the Code treats the new agreed-upon price as if it were the original price, which means there will not be COD income to the buyer.[18]"

1) So question number 1, the previous years company's net profit is negative from previous year which is around -$64,000 as well as purchase price of share both of these will help lower any liability from my understanding, but what should i do to lower this cancellation of debt income is there any way? I will be passing this information on to the person who is creating my balance sheet.

2) Short question. Is it better if i pay something by credit card and get 2% cash back (assuming this cash back 2% will be booked as income) or buy something cheaper at 2%, which option will lower my tax liabilities

Please quote your best price. Looking forward to a long term relationship.

Accounting Finance Corporate Income Tax Tax Certified Public Accountant

Project ID: #32802801

About the project

6 proposals Remote project Active 2 years ago

6 freelancers are bidding on average $68 for this job

Muhammad6979

Dear sir /madam I am chartered accountant and i have more than 15 years of experience in finance and audit. You can see my profile. Thanks and regards Muhammad Ilyas Saeed.

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shahidacca24

I have have read your proposal describes it: 1- Payment through credit card or buy cheaper The bank offers cash back on certain transactions and cash back have limits like say user can avail maximum cash back during a More

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BushraZia321

I can answer your balance sheet related questions perfectly and accurately. Message me to get answers solved right away.

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abubak02341

Hello Mr Mrs! My name is abubakar. I read out your project, I am ready to solve your problem. If give me opportunity. Thank you

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