Common use of Multiple indebtedness Clause in Contracts

Multiple indebtedness. If a share- holder holds more than one indebted- ness (including any open account debt and any debt treated as a single indebt- edness under paragraph (a)(2)(ii) of this section) as of the beginning of an S cor- poration’s taxable year, any net in- crease is applied first to restore the re- duction of basis in any indebtedness re- paid (in whole or in part) in that tax- able year to the extent necessary to offset any gain that would otherwise be realized on the repayment. Any re- maining net increase is applied to re- store each outstanding indebtedness (including any open account debt and any debt treated as a single indebted- ness under paragraph (a)(2)(ii) of this section) in proportion to the amount that the basis of each outstanding in- debtedness has been reduced under sec- tion 1367(b)(2)(A) and paragraph (b) of this section and not restored under sec- tion 1367(b)(2)(B) and this paragraph (c). (d) Time at which adjustments to basis of indebtedness are effective— (1) In general. The amounts of the ad- justments to basis of indebtedness (in- cluding open account debt) provided in section 1367(b)(2) and this section are determined as of the close of the S cor- poration’s taxable year, and the adjust- ments are generally effective as of the close of the S corporation’s taxable year. However, if the shareholder is not a shareholder in the S corporation at that time, these adjustments are effec- tive immediately before the share- holder terminates his or her interest in the S corporation. Except as provided in paragraph (d)(2) of this section, if a debt is disposed of or repaid in whole or in part before the close of the taxable year, the basis of that indebtedness is restored under paragraph (c) of this section, effective immediately before the disposition or the first repayment on the debt during the taxable year. To the extent any indebtedness of the S corporation to the shareholder is dis- posed of or repaid (in whole or in part) during the taxable year and the share- holder’s basis in that indebtedness has been reduced under paragraph (b) of this section and is not restored com- pletely under paragraph (c) of this sec- tion, the disposition or repayment is a recognition event effective imme- diately before the indebtedness is dis- posed of or repaid (in whole or in part).

Multiple indebtedness. If a share- holder holds more than one indebted- ness (including any open account debt and any debt treated as a single indebt- edness under paragraph (a)(2)(ii) of this section) as of the beginning of an S cor- porationa corpora- tion’s taxable year, any net in- crease increase is applied first to restore the re- duction reduction of basis in any indebtedness re- paid repaid (in whole or in part) in that tax- able taxable year to the extent necessary to offset any gain that would otherwise be realized on the repayment. Any re- maining remaining net increase is applied to re- store restore each outstanding out- standing indebtedness (including any open account debt and any debt treated as a single indebted- ness under paragraph (a)(2)(ii) of this section) in proportion to the amount that the basis of each outstanding in- debtedness out- standing indebtedness has been reduced under sec- tion section 1367(b)(2)(A) and paragraph para- graph (b) of this section and not restored re- stored under sec- tion section 1367(b)(2)(B) and this paragraph (c). (d) Time at which adjustments to basis of indebtedness are effective— (1) In generalgen- eral. The amounts of the ad- justments adjustments to basis of indebtedness (in- cluding open account debt) provided in section 1367(b)(2) and this section are determined as of the close of the S cor- poration’s taxable year, and the adjust- ments are generally effective as of the close of the S corporation’s taxable year. However, if the shareholder is not a shareholder in the S corporation at that time, these adjustments are effec- tive effective immediately before the share- holder shareholder terminates his or her interest in the S corporation. Except as provided in paragraph (d)(2) of this section, if If a debt is disposed of or repaid in whole or in part before the close of the taxable year, the basis of that indebtedness is restored under paragraph (c) of this section, effective immediately before the disposition or the first repayment on the debt during the taxable year. (2) Effect of election under section 1377(a)(2) or § 1.1368–1(g)(2). To If an elec- tion is made under section 1377(a)(2) (to terminate the extent any indebtedness year in the case of the S corporation termination of a shareholder’s interest) or under § 1.1368–1(g)(2) (to terminate the shareholder is year in the case of a qualifying dis- posed of or repaid position), this paragraph (in whole or in partd) during applies as if the taxable year and the share- holder’s basis in that indebtedness has been reduced under paragraph (b) consisted of this section and is not restored com- pletely under paragraph (c) of this sec- tionsepa- rate taxable years, the disposition first of which ends at the close of the day on which the shareholder either terminates his or repayment is her interest in the corporation or disposes of a recognition event effective imme- diately before substantial amount of stock, whichever the indebtedness is dis- posed of or repaid (in whole or in part)case may be.

Multiple indebtedness. If a share- holder holds more than one indebted- ness (including any open account debt and any debt treated as a single indebt- edness under paragraph (a)(2)(ii) of this section) as of the beginning of an S cor- poration’s taxable year, any net in- crease is applied first to restore the re- duction of basis in any indebtedness re- paid (in whole or in part) in that tax- able year to the extent necessary to offset any gain that would otherwise be realized on the repayment. Any re- maining net increase is applied to re- store each outstanding indebtedness (including any open account debt and any debt treated as a single indebted- ness under paragraph (a)(2)(ii) of this section) in proportion to the amount that the basis of each outstanding in- debtedness has been reduced under sec- tion 1367(b)(2)(A) and paragraph (b) of this section and not restored under sec- tion 1367(b)(2)(B) and this paragraph (c). (d) Time at which hich adjustments to basis of indebtedness are effective— (1) In general. The amounts of the ad- justments to basis of indebtedness (in- cluding open account debt) provided in section 1367(b)(2) and this section are determined as of the close of the S cor- poration’s taxable year, and the adjust- ments are generally effective as of the close of the S corporation’s taxable year. However, if the shareholder is not a shareholder in the S corporation at that time, these adjustments are effec- tive immediately before the share- holder terminates his or her interest in the S corporation. Except as provided in paragraph (d)(2) of this section, if a debt is disposed of or repaid in whole or in part before the close of the taxable year, the basis of that indebtedness is restored under paragraph (c) of this section, effective immediately before the disposition or the first repayment on the debt during the taxable year. To the extent any indebtedness of the S corporation to the shareholder is dis- posed of or repaid (in whole or in part) during the taxable year and the share- holder’s basis in that indebtedness has been reduced under paragraph (b) of this section and is not restored com- pletely under paragraph (c) of this sec- tion, the disposition or repayment is a recognition event effective imme- diately before the indebtedness is dis- posed of or repaid (in whole or in part).