Revenue Ruling 84-176
Internal Revenue Service
1984-2 C.B. 34 (1984)
In 1981, a wholesale distributor entered into two contracts with a seller of goods. Under the contracts, the distributor ordered goods the seller promised to ship in six lots between March and August of 1982. After the seller shipped the first lot and part of the second lot, the seller refused to ship the rest of the distributor’s order. At the time of the seller’s refusal, the distributor owed the seller $1,000x for the goods the seller had already shipped. The distributor refused to pay the money owed, and the seller sued the distributor to recover. The distributor counterclaimed in the seller’s suit, seeking damages for lost profits suffered due to the seller’s alleged breach of the contracts. The distributor and the seller ultimately settled the dispute in late 1982. In the settlement, the distributor agreed to pay the seller $500x of the outstanding $1,000x. The seller agreed to forgive the remaining $500x owed by the distributor in exchange for the distributor’s release of the breach-of-contract counterclaim. The Internal Revenue Service issued a revenue ruling regarding whether the $500x forgiven by the seller constituted discharge-of-indebtedness income to the distributor that was subject to exclusion from the distributor’s gross income under § 108 of the Internal Revenue Code (the Code).
Rule of Law
Holding and Reasoning ()
What to do next…
Unlock this case brief with a free (no-commitment) trial membership of Quimbee.
You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 705,000 law students since 2011. Some law schools—such as Yale, Berkeley, and Northwestern—even subscribe directly to Quimbee for all their law students.Unlock this case briefRead our student testimonials
Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.
Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students.Learn about our approachRead more about Quimbee
Here's why 705,000 law students have relied on our case briefs:
- Written by law professors and practitioners, not other law students. 44,300 briefs, keyed to 983 casebooks. Top-notch customer support.
- The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
- Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
- Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.