Gitlitz v. Commissioner

I agree with the majority’s reasoning with the exception of footnotes 6 and 10. The basic statutory provision before us is 26 U. S. C. § 108 — the provision that excludes from the “gross income” of any “insolvent” taxpayer, income that cancellation of a debt (COD) would otherwise generate. As the majority acknowledges, however, ante, at 214-215, n. 6, § 108 contains a subsection that sets forth a special exception. The exception, entitled “Special rules for S corporation,” says:

*221“(A) Certain provisions to be applied at corporate level.

“In the case of an S corporation, subsections (a), (b),…