October Term 2000 · Docket 99-1295
Does debt discharge for insolvent S corporations count as income?
the sides that brought the case claim debt discharge is tax-exempt. The government says it is taxable income.
Verified source milestones
- — An official oral-argument transcript was verified.
The arguments, in order
This case may have been argued more than once. Each entry below uses that session's official transcript. Later arguments do not erase earlier ones.
Argument 1 ·
What happened at the argument
Mr. Hallett stated the issue is limited due to the Commissioner's brief position.
Mr. Jones argued Congress did not provide the unique double tax benefit.
Mr. Jones asked if the discharge is income or tax-exempt income.
A justice asked if other Courts of Appeals ruled against the government.
Read the official transcript for this argument · Official argument details
Sources used for this argument breakdown
- Official Supreme Court Transcript — file page 22, lines 9-39 — Transcript, file page 22, lines 9-39
- Official Supreme Court Transcript — file page 3, lines 17-31 — Transcript, file page 3, lines 17-31
- Official Supreme Court Transcript — file page 3, lines 5-15 — Transcript, file page 3, lines 5-15
- Official Supreme Court Transcript — file page 43, lines 45-47 — Transcript, file page 43, lines 45-47
A citizen's guide to the whole case
What this case is about
This case tests how the tax code treats debt forgiveness for insolvent S corporations. the sides that brought the case argue the discharge is tax-exempt income. The government argues it is taxable income that increases shareholder basis.
Official sources for this section
- Official Supreme Court Transcript — file page 22, lines 9-39 — Transcript, file page 22, lines 9-39
- Official Supreme Court Transcript — file page 3, lines 17-31 — Transcript, file page 3, lines 17-31
How the case got here
The Supreme Court heard oral argument in this case on October 2, 2000.
Official sources for this section
- Official Supreme Court Transcript — file page 3, lines 5-15 — Transcript, file page 3, lines 5-15
What each side wants
the sides that brought the case want the Court to treat debt discharge as tax-exempt income.
The government wants the Court to treat debt discharge as taxable income.
Official sources for this section
- Official Supreme Court Transcript — file page 22, lines 9-39 — Transcript, file page 22, lines 9-39
- Official Supreme Court Transcript — file page 3, lines 17-31 — Transcript, file page 3, lines 17-31
What each side says
the sides that brought the case argue the discharge is tax-exempt income flowing to shareholders.
The government argues Congress did not grant this unique double tax benefit.
Official sources for this section
- Official Supreme Court Transcript — file page 22, lines 9-39 — Transcript, file page 22, lines 9-39
- Official Supreme Court Transcript — file page 3, lines 17-31 — Transcript, file page 3, lines 17-31
What the justices asked
Have other Courts of Appeals ruled against the government on this point?
Official sources for this section
- Official Supreme Court Transcript — file page 43, lines 45-47 — Transcript, file page 43, lines 45-47
Why it matters
This dispute determines how shareholders report income from corporate debt forgiveness. It clarifies the tax status of discharged debt for insolvent entities. The outcome affects how taxpayers calculate their basis and income.
Official sources for this section
- Official Supreme Court Transcript — file page 22, lines 9-39 — Transcript, file page 22, lines 9-39
- Official Supreme Court Transcript — file page 3, lines 17-31 — Transcript, file page 3, lines 17-31
What happens next
This article currently covers the argument record. Use the official docket link for later case activity.
Official sources for this section
- Official Supreme Court Transcript — file page 3, lines 5-15 — Transcript, file page 3, lines 5-15
- Official Supreme Court Transcript — file page 43, lines 45-47 — Transcript, file page 43, lines 45-47
Official Court provenance
Official docket and case history · Official Supreme Court oral-argument detail page
Title and summary sources
- Official Supreme Court Transcript — file page 22, lines 9-39 — Transcript, file page 22, lines 9-39
- Official Supreme Court Transcript — file page 3, lines 17-31 — Transcript, file page 3, lines 17-31
- Official Supreme Court Transcript — file page 22, lines 9-39 — Transcript, file page 22, lines 9-39
- Official Supreme Court Transcript — file page 3, lines 17-31 — Transcript, file page 3, lines 17-31
Revision history
- Revision 1 · Official Transcript ·
Correction: Rewritten to the concise citizen-facing editorial standard.
- Revision 2 · Official Transcript ·
Correction: Migrated to the dated official Court activity contract without model use.