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Excludes certain forgiven commercial or retail debt secured by business real property from a taxpayer's gross income, subject to timing and eligibility rules. The change to the tax code applies to debt incurred before March 1, 2023 and discharged in a limited window around Dec 31, 2023 through Jan 1, 2028, and keeps related attribute-reduction rules in place.
The bill helps businesses with certain discharged commercial real‑property debt avoid immediate taxable income and gain liquidity during a limited window, at the cost of reduced federal revenue and added fairness and compliance trade‑offs for non‑qualifying parties and tax administrators.
Businesses with qualifying commercial or retail debt secured by business real property: canceled indebtedness discharged between Dec 31, 2023 and Jan 1, 2028 will be excluded from taxable income, reducing tax liability and improving near‑term cash flow.
Taxpayers and IRS examiners: the bill adds clearer statutory definitions and cross‑references in §108, reducing ambiguity in tax treatment for these situations and making administration and compliance more straightforward in qualifying cases.
All taxpayers/government: excluding canceled commercial debt from income will lower federal tax receipts over the covered period, potentially increasing deficits or reducing revenues available for other programs.
Businesses and creditors that do not meet the narrow timing, security, or property‑use criteria: will not receive the benefit, creating unequal tax treatment between similarly situated firms depending on technical eligibility.
Taxpayers and the IRS: applying new definitions and exceptions (e.g., §168(b)(3)(B), §144(c)(6)(B)) and adjusting attribute reductions under §108(b)(1) may create compliance costs and administrative complexity for both filers and the IRS.
Introduced June 24, 2025 by Claudia Tenney · Last progress June 24, 2025