Modification of Treatment of Student Loan (Children of Realtors, Brokers, and Real Estate Professionals) Forgiveness in 2021 – 2025: Section 9675 of the Act excludes certain discharges of student loan debt occurring in years 2021 through 2025 from gross income.
Exclusion of Debt Forgiveness from Income: Under new Code Sec. 108(f)(5), gross income does not include any amount which would otherwise be includible in gross income by reason of the discharge (in whole or in part) after December 31, 2020, and before January 1, 2026, of:
• any loan provided expressly for post-secondary educational expenses, regardless of whether provided through the educational institution or directly to the borrower, if the loan was made, insured, or guaranteed by the United States (or an instrumentality or agency thereof), a state, territory, or possession of the United States, or the District of Columbia (or any political subdivision thereof), or an eligible educational institution (as defined in Code Sec. 25A);
• any private education loan (as defined in Section 140(a)(7) of the Truth in Lending Act);
• any loan made by any educational organization described in Code Sec. 170(b)(1)(A)(ii) if it was made (i) under an agreement with any entity described in (1) above or any private education lender (as defined in Section 140(a) of the Truth in Lending Act) under which the funds from which loan was made were provided to the educational organization, or (ii) under a program designed to encourage students to serve in occupations with unmet needs or in areas with unmet needs and under which the services provided by the students (or former students) are for or under the direction of a governmental unit or an organization described in Code Sec. 501(c)(3) and exempt from tax under Code Sec. 501(a); or
• any loan made by an educational organization described in Code Sec. 170(b)(1)(A)(ii) or by an organization exempt from tax under Code Sec. 501(a) to refinance a loan to an individual to assist the individual in attending any such educational organization, but only if the refinancing loan is made under a program of the refinancing organization which is designed to encourage students to serve in occupations with unmet needs or in areas with unmet needs, and under which the services provided by the students (or former students) are for or under the direction of a governmental unit or an organization described in Code Sec. 501(c)(3) and exempt from tax under Code Sec. 501(a).
Exception to Debt Forgiveness: The exclusion provided under Code Sec. 108(f)(5) does not apply to the discharge of a loan made by an educational organization or a private education lender (as defined in Section 140(a)(7) of the Truth in Lending Act) if the discharge is on account of services performed for either such organization or for such private education lender.
Please contact the office of Don Fitch Accountancy at (760)567-3110 or Email Don.Fitch@CPA.com if you have any questions or would like additional information.
DON FITCH, CPA
74478 Highway 111 #3
Palm Desert, CA 92260
Toll Free: (877)CPA-Help or (877)272-4357
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Email: DonFitchCPA@paylesstax.com
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(Updated 03/13/2021 08:05)