Let's be honest. After what I posted from credible sources (IRS and American Bar Association), if someone (e.g. 2good) still refuses to accept what "exclusion" means and doesn't mean, I must say that he is just trying to deceive people.
Look closely the text below that I posted earlier. The very first paragraph under the heading "exclusions" starts with:
In short, IRC § 108(a)(1)(A) provides that if a taxpayer's debts are discharged in bankruptcy, then the resulting COD income is fully excluded.
Then in the same paragraph, skipping only one sentence, it states:
Such bankruptcy debtor, however, will be required to undergo "attribute reduction," as discussed below.
...
You tell me if 2good simply forgot to read the whole paragraph (don't think so), or did he conveniently omit some critical sentences.
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Quoted text
Bankruptcy and Insolvency Exclusions
Bankruptcy. The bankruptcy exclusion is probably the broadest exclusion for COD income. In short, IRC § 108(a)(1)(A) provides that if a taxpayer's debts are discharged in bankruptcy, then the resulting COD income is fully excluded. This rule applies whether the discharge occurs under Chapter 7, 11, 12, or 13 of the Bankruptcy Code. Such bankruptcy debtor, however, will be required to undergo "attribute reduction," as discussed below.
Attribute Reduction. If a debtor excludes COD income under either the bankruptcy or insolvency exception, then the attribute reduction rules are triggered. Id. § 108(b). Attribute reduction forces the debtor to trade the current exclusion of income for future tax deductions. The debtor will be required to reduce tax attributes, in the following order:
