SECTION 3. SCOPE

.01 This revenue procedure applies to the discharge of indebtedness of any taxpayer, other than a C corporation, provided the requirements of section 3.03 of this revenue procedure are satisfied.

.02 This revenue procedure provides a safe harbor under which the Service will treat debt as “secured by” real property for purposes of § 108(c)(3)(A).

.03 The requirements of this section 3.03 of this revenue procedure are satisfied if:

(1) The taxpayer or a wholly owned disregarded entity of the taxpayer (“Borrower”) incurs indebtedness.

(2) Borrower directly or indirectly owns 100% of the ownership interest in a separate disregarded entity owning real property (“Property Owner”). Borrower is not the same entity as Property Owner.

February 24, 2014 614 Bulletin No. 2014–9

Further, as provided in § 108(c)(1), the basis of depreciable real property of the taxpayer will be reduced by the amount excluded from gross income.