NONTAXABLE PURCHASE-PRICE REDUCTION VERSUS TAXABLE DISPOSITION - THE INTERPLAY BETWEEN SECTIONS 108(E)(5) AND 453B(F)

The basic application of Sections 108(e) (5) and 453B(f) is considered , the different tax results that occur by application of each section is discussed, and the areas of overlap between the two sections are ex plored. Finally, rules are suggested for determining whether a reducti on in the liability of the buyer should be viewed as a nontaxable purc hase-price reduction under Section 108(e)(5) or a taxable disposition under Section 453B(f).