"Chess One" wrote
But lookee here! Since you are a CPA and possibly gullible enough to
give free advice, what is the precedent for a non-profit forgiving a
for-profit its debt without any security or recovery of that debt? Let's
say the amount is about $150,000 and the non-profit in a monopoly
situation.




The NFP would be required to issue a 1099-C for the cancellation of the
debt.

Good grief! But what does that mean?



That means, if done properly, the IRS will know that the for-profit entity
received a sum of money (or goods or services) that they didn't have to pay
back, and that's income to the for-profit entity in most cases.

The same thing is looming for most of the folks that let their homes get
foreclosed on. I'll bet there will be tons of folks who get bitch slapped
with taxes on their foreclosure this year.




The FP entity would have taxable income in most cases.

Then the board would have a fiduciary responsibility to not do business
with that entity in the future.

AH! In this instance it insisted on continuing business with that entity,



Really now, would a reasonable person do such a thing? And that IS the
standard the Board members could be held accountable to. "Would a
reasonable person do what they did?" That's what the jury would be
deciding.




Hey - don't you boys down there go n "y'all" a yankee,



We "y'all" everybody, and proudly tell redneck jokes about ourselves. It's
how we get-r-done down here.





--
Paul A. Thomas, CPA
Athens, Georgia