SECTION 4. APPLICATION

.01 Discharge of indebtedness income . The IRS will not assert that a taxpayer within the scope of this revenue procedure must recognize gross income as a result of the Defense to Repayment discharge process for discharged Federal student loans that were taken out to finance attendance at a school owned by ACI. See section 2.02 of this revenue procedure for a general discussion regarding the exclusion from gross income for borrowers participating in the Closed School discharge process.

.02 Recapture of tax credits and tax benefit rule . The IRS will not assert that a taxpayer within the scope of this revenue procedure must increase his or her taxes owed in the year of a discharge, or in a prior year, as a result of either discharge process if in a prior year he or she received an education credit under section 25A of the Code attributable to payments made with proceeds of the discharged

loan. In addition, the IRS also will not assert that a taxpayer within the scope of this revenue procedure must increase his or her income in the year of the discharge if he or she took a deduction under section 221 in a prior year attributable to interest paid on a discharged loan or a deduction under section 222 in a prior taxable year attributable to payments of qualified tuition and related expenses made with proceeds of the discharged loan.

.03 Information reporting. The IRS will not assert that any creditor that is an applicable entity, as defined in section 6050P of the Code, must file information returns and furnish payee statements under that section for the discharge of any indebtedness within the scope of this revenue procedure.

Further, this revenue procedure modifies Rev. Proc. 2015–57 to provide that the IRS will not assert that any creditor under that revenue procedure that is an applicable entity, as defined in section 6050P of the Code, must file information returns and furnish payee statements for the discharge of any indebtedness under that revenue procedure.