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Hi and welcome to Just Answer!If a corporate files for Chapter 11 protection - and it will have some debt cancelled - the amount of cancelled debt is generally included into taxable income.Because of Chapter 11 protection - the corporate may exclude cancelled debt from taxable income, however such exclusion requires that certain tax attributes are reduced. In particular - a NOT is one of such attributes. So if the corporate has a NOL carried from previous years - the NOL shoudl be reduced by the amount of forgiven debt that is excluded from taxable income. It will not loose a NOT - but the NOL should be reduced.