Under the American Recovery and Reinvestment Act of 2009, an eligible business that repurchases it’s debt in 2009 and 2010 can elect to recognize cancellation of debt income ratably over a five-taxable-year inclusion period, beginning with the taxpayer’s fourth or fifth taxable year after the year the debt is repurchased [IRC §108(i)]. The IRS recently came out with guidance on what kinds of businesses and what types of debt qualify for cancellation of debt income deferral.