Sale of building during Bankruptcy

[ILLMAS]

I was caught off guard today, TP asked me if he sells one of his building while he is in bankruptcy/reorganization that he if can exclude the gain because of the bankruptcy? I said probably not, but that I would find out, does anyone know if this is true?

Thanks

MAS

[kcjenkins]

It's not a yes or no question, Marco. IF he is insolvent both before and after the sale, which is often the case, then the gain can be excluded, But if the sale makes him solvent, then some of it may be taxable. Check out Pub 908 and Pub 5082 for details and examples.