CCA 201319018: Unincluded liabilities do not increase amount realized on receivables

Plain-English summary

Chief Counsel Advice addresses the amount realized when a taxpayer sells receivables. The advice states that the amount realized should not be increased by liabilities that the taxpayer did not include in establishing basis. It relies on Treas. Reg. § 1.1001-2(a)(3), which addresses liabilities incurred to acquire property and not taken into account in determining basis.

Ruling snapshot

• Question: Does a liability omitted from basis increase the amount realized on a sale of receivables?
• Outcome: Advice given.
• Key authorities: IRC § 1001; Treas. Reg. § 1.1001-2(a)(3)

Full text (IRS public release)

ID: CCA_2013041815172654 Number: 201319018
Release Date: 5/10/2013
Office: -------------
UILC: 1001.00-00

From: -----------------
Sent: Thursday, April 18, 2013 3:17:30 PM
To: -----------------
Cc: --------------------------------------------------------------------- Subject: Section 1001

---------to confirm our conversation earlier today, we are of the opinion that taxpayer’s amount realized on the sale of its receivables should not be increased by the amount of D2 liabilities, which it did not include in establishing basis. Section 1.1001-2(a)(3) of the regulations provides that if a liability is incurred by reason of the acquisition of property, and that liability was not taken into account in determining the taxpayer’s basis, then that liability is not taken into account for purposes of amount realized.

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