Rev. Proc. 2014-20, I.R.B. 2014-09 (Feb. 5, 2014)

(safe harbor provided concerning I.R.C. Sec. 108(a)(1)(D) which allows taxpayers (other than C corporations) to avoid debt discharge income on forgiveness of real property business debt where real property is used in taxpayer's trade or business and debt is secured by the real property; Rev. Proc. addresses issue of whether direct mortgage on such real property is considered to be "secured by the real property" for purposes of I.R.C. Sec. 108(a)(1)(D); safe harbor provides that where debt is secured by pledge of taxpayer's ownership interest in disregarded entity that holds the real property, security requirement is satisfied; security interest must be first priority security and at least 90 percent of fair market value of assets of disregarded entity must be real property used in taxpayer's trade or business and remaining assets must be incidental to acquisition and operation of such real property; safe harbor not sole method of satisfying requirements of I.R.C. Sec. 108(a)(1)(D) when security arrangement not accompanied by mortgage).