Article The Tax Lawyer

Regarding the Advisability of a Prohibition on the Taxable Asset Sale to Creditors in Bankruptcy

This article considers and argues for the continued legal permissibility of the so-called “Bruno’s transaction,” pursuant to which debtors with low-tax-basis assets and high loss carryforwards that reorganize in chapter 11 by selling their assets to creditors in return for a release of liabilities can avoid the application of the Internal Revenue Code’s “G-Reorganization” provisions, creating significant depreciable basis in their assets essentially at fair market value.