Revenue Ruling 91-31
Internal Revenue Service
1991-1 C.B. 19 (1991)
In 1988, an individual taxpayer borrowed $1 million from a third-party lender and signed a $1 million note payable to the lender. The individual had no personal liability on the note, meaning that the debt was nonrecourse debt. Instead, the note was secured by an office building, valued at $1 million, that the individual had acquired from another entity using the proceeds of the financing. In 1989, the value of the office building was $800,000, and the outstanding principal on the note was $1 million. The lender agreed to modify the note’s terms by reducing the principal amount of the note to $800,000. The Internal Revenue Service (IRS) issued a revenue ruling to clarify whether the lender’s reduction in the principal amount of the undersecured nonrecourse debt owed by the individual resulted in the realization of discharge-of-indebtedness income to the individual or in the reduction of the basis in the office building securing the debt.
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 707,000 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 707,000 law students have relied on our case briefs:
- Written by law professors and practitioners, not other law students. 44,500 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.