26 U.S.C. § 108: Income from discharge of indebtedness

the discharge occurs in a title 11 case, the discharge occurs when the taxpayer is insolvent, the indebtedness discharged is qualified farm indebtedness, in the case of a taxpayer other than a C corporation, the indebtedness discharged is qualified real property business indebtedness, or before January 1, 2026 , or subject to an arrangement that is entered into and evidenced in writing before January 1, 2026 . Subparagraphs (B), (C), (D), and (E) of paragraph (1) shall not apply to a discharge which occurs in a title 11 case. Subparagraphs (C) and (D) of paragraph (1) shall not apply to a discharge to the extent the taxpayer is insolvent. Paragraph (1)(B) shall not apply to a discharge to which paragraph (1)(E) applies unless the taxpayer elects to apply paragraph (1)(B) in lieu of paragraph (1)(E). In the case of a discharge to which paragraph (1)(B) applies, the amount excluded under paragraph (1)(B) shall not exceed the amount by which the taxpayer is insolvent. The amount excluded from gross income under subparagraph (A), (B), or (C) of subsection (a)(1) shall be applied to reduce the tax attributes of the taxpayer as provided in paragraph (2). Any net operating loss for the taxable year of the discharge, and any net operating loss carryover to such taxable year. Any carryover to or from the taxable year of a discharge of an amount for purposes for determining the amount allowable as a credit under section 38 (relating to general business credit). The amount of the minimum tax credit available under section 53(b) as of the beginning of the taxable year immediately following the taxable year of the discharge. Any net capital loss for the taxable year of the discharge, and any capital loss carryover to such taxable year under section 1212. The basis of the property of the taxpayer. For provisions for making the reduction described in clause (i), see section 1017. Any passive activity loss or credit carryover of the taxpayer under section 469(b) from the taxable year of the discharge. Any carryover to or from the taxable year of the discharge for purposes of determining the amount of the credit allowable under section 27. Except as provided in subparagraph (B), the reductions described in paragraph (2) shall be one dollar for each dollar excluded by subsection (a). The reductions described in subparagraphs (B), (C), and (G) shall be 33⅓ cents for each dollar excluded by subsection (a). The reduction described in subparagraph (F) in any passive activity credit carryover shall be 33⅓ cents for each dollar excluded by subsection (a). The reductions described in paragraph (2) shall be made after the determination of the tax imposed by this chapter for the taxable year of the discharge. The reductions described in subparagraph (A) or (D) of paragraph (2) (as the case may be) shall be made first in the loss for the taxable year of the discharge and then in the carryovers to such taxable year in the order of the taxable years from which each such carryover arose. The reductions described in subparagraphs (B) and (G) of paragraph (2) shall be made in the order in which carryovers are taken into account under this chapter for the taxable year of the discharge. The taxpayer may elect to apply any portion of the reduction referred to in paragraph (1) to the reduction under section 1017 of the basis of the depreciable property of the taxpayer. The amount to which an election under subparagraph (A) applies shall not exceed the aggregate adjusted bases of the depreciable property held by the taxpayer as of the beginning of the taxable year following the taxable year in which the discharge occurs. Paragraph (2) shall not apply to any amount to which an election under this paragraph applies. The amount excluded from gross income under subparagraph (D) of subsection (a)(1) shall be applied to reduce the basis of the depreciable real property of the taxpayer. For provisions making the reduction described in subparagraph (A), see section 1017. the outstanding principal amount of such indebtedness (immediately before the discharge), over the fair market value of the real property described in paragraph (3)(A) (as of such time), reduced by the outstanding principal amount of any other qualified real property business indebtedness secured by such property (as of such time). The amount excluded under subparagraph (D) of subsection (a)(1) shall not exceed the aggregate adjusted bases of depreciable real property (determined after any reductions under subsections (b) and (g)) held by the taxpayer immediately before the discharge (other than depreciable real property acquired in contemplation of such discharge). was incurred or assumed by the taxpayer in connection with real property used in a trade or business and is secured by such real property, was incurred or assumed before January 1, 1993 , or if incurred or assumed on or after such date, is qualified acquisition indebtedness, and with respect to which such taxpayer makes an election to have this paragraph apply. For purposes of paragraph (3)(B), the term “qualified acquisition indebtedness” means, with respect to any real property described in paragraph (3)(A), indebtedness incurred or assumed to acquire, construct, reconstruct, or substantially improve such property. The Secretary shall issue such regulations as are necessary to carry out this subsection, including regulations preventing the abuse of this subsection through cross-collateralization or other means. for which the taxpayer is liable, or subject to which the taxpayer holds property. For purposes of this section, the term “title 11 case” means a case under title 11 of the United States Code (relating to bankruptcy), but only if the taxpayer is under the jurisdiction of the court in such case and the discharge of indebtedness is granted by the court or is pursuant to a plan approved by the court. For purposes of this section, the term “insolvent” means the excess of liabilities over the fair market value of assets. With respect to any discharge, whether or not the taxpayer is insolvent, and the amount by which the taxpayer is insolvent, shall be determined on the basis of the taxpayer’s assets and liabilities immediately before the discharge. The term “depreciable property” has the same meaning as when used in section 1017. In the case of a partnership, subsections (a), (b), (c), and (g) shall be applied at the partner level. In the case of an S corporation, subsections (a), (b), (c), and (g) shall be applied at the corporate level, including by not taking into account under section 1366(a) any amount excluded under subsection (a) of this section. In the case of an S corporation, for purposes of subparagraph (A) of subsection (b)(2), any loss or deduction which is disallowed for the taxable year of the discharge under section 1366(d)(1) shall be treated as a net operating loss for such taxable year. The preceding sentence shall not apply to any discharge to the extent that subsection (a)(1)(D) applies to such discharge. For purposes of subsection (e)(6), a shareholder’s adjusted basis in indebtedness of an S corporation shall be determined without regard to any adjustments made under section 1367(b)(2). In any case under chapter 7 or 11 of title 11 of the United States Code to which section 1398 applies, for purposes of paragraphs (1) and (5) of subsection (b) the estate (and not the individual) shall be treated as the taxpayer. The preceding sentence shall not apply for purposes of applying section 1017 to property transferred by the estate to the individual. An election under paragraph (5) of subsection (b) or under paragraph (3)(C) of subsection (c) shall be made on the taxpayer’s return for the taxable year in which the discharge occurs or at such other time as may be permitted in regulations prescribed by the Secretary. An election referred to in subparagraph (A), once made, may be revoked only with the consent of the Secretary. An election referred to in subparagraph (A) shall be made in such manner as the Secretary may by regulations prescribe. For provision that no reduction is to be made in the basis of exempt property of an individual debtor, see section 1017(c)(1). Except as otherwise provided in this section, there shall be no insolvency exception from the general rule that gross income includes income from the discharge of indebtedness. No income shall be realized from the discharge of indebtedness to the extent that payment of the liability would have given rise to a deduction. The amount taken into account with respect to any discharge shall be properly adjusted for unamortized premium and unamortized discount with respect to the indebtedness discharged. For purposes of determining income of the debtor from discharge of indebtedness, to the extent provided in regulations prescribed by the Secretary, the acquisition of outstanding indebtedness by a person bearing a relationship to the debtor specified in section 267(b) or 707(b)(1) from a person who does not bear such a relationship to the debtor shall be treated as the acquisition of such indebtedness by the debtor. Such regulations shall provide for such adjustments in the treatment of any subsequent transactions involving the indebtedness as may be appropriate by reason of the application of the preceding sentence. For purposes of this paragraph, sections 267(b) and 707(b)(1) shall be applied as if section 267(c)(4) provided that the family of an individual consists of the individual’s spouse, the individual’s children, grandchildren, and parents, and any spouse of the individual’s children or grandchildren. For purposes of this paragraph, two entities which are treated as a single employer under subsection (b) or (c) of section 414 shall be treated as bearing a relationship to each other which is described in section 267(b). the debt of a purchaser of property to the seller of such property which arose out of the purchase of such property is reduced, in a title 11 case, or when the purchaser is insolvent, and but for this paragraph, such reduction would be treated as income to the purchaser from the discharge of indebtedness, section 118 shall not apply, but such corporation shall be treated as having satisfied the indebtedness with an amount of money equal to the shareholder’s adjusted basis in the indebtedness. such stock (and any other property the basis of which is determined in whole or in part by reference to the adjusted basis of such stock) shall be treated as section 1245 property, as deductions under subsection (a) or (b) of section 166 (by reason of the worthlessness or partial worthlessness of the indebtedness), or as an ordinary loss on the exchange, an exchange of such stock qualifying under section 354(a), 355(a), or 356(a) shall be treated as an exchange to which section 1245(b)(3) applies. In the case of any creditor who computes his taxable income under the cash receipts and disbursements method, proper adjustment shall be made in the amount taken into account under clause (ii) of subparagraph (A) for any amount which was not included in the creditor’s gross income but which would have been included in such gross income if such indebtedness had been satisfied in full. For purposes of this paragraph, stock of a corporation in control (within the meaning of section 368(c)) of the debtor corporation shall be treated as stock of the debtor corporation. For purposes of this paragraph, the term “debtor corporation” includes a successor corporation. Under regulations prescribed by the Secretary, rules similar to the rules of the foregoing subparagraphs of this paragraph shall apply with respect to the indebtedness of a partnership. a debtor corporation transfers stock, or a debtor partnership transfers a capital or profits interest in such partnership, Any amount included in gross income by reason of the discharge of indebtedness shall not be taken into account for purposes of paragraphs (2) and (3) of section 856(c). For purposes of determining income of a debtor from discharge of indebtedness, if a debtor issues a debt instrument in satisfaction of indebtedness, such debtor shall be treated as having satisfied the indebtedness with an amount of money equal to the issue price of such debt instrument. For purposes of subparagraph (A), the issue price of any debt instrument shall be determined under sections 1273 and 1274. For purposes of the preceding sentence, section 1273(b)(4) shall be applied by reducing the stated redemption price of any instrument by the portion of such stated redemption price which is treated as interest for purposes of this chapter. In the case of an individual, gross income does not include any amount which (but for this subsection) would be includible in gross income by reason of the discharge (in whole or in part) of any student loan if such discharge was pursuant to a provision of such loan under which all or part of the indebtedness of the individual would be discharged if the individual worked for a certain period of time in certain professions for any of a broad class of employers. the United States, or an instrumentality or agency thereof, a State, territory, or possession of the United States, or the District of Columbia, or any political subdivision thereof, which is exempt from taxation under section 501(c)(3), which has assumed control over a State, county, or municipal hospital, and whose employees have been deemed to be public employees under State law, or pursuant to an agreement with any entity described in subparagraph (A), (B), or (C) under which the funds from which the loan was made were provided to such educational organization, or pursuant to a program of such educational organization which is designed to encourage its students to serve in occupations with unmet needs or in areas with unmet needs and under which the services provided by the students (or former students) are for or under the direction of a governmental unit or an organization described in section 501(c)(3) and exempt from tax under section 501(a). Paragraph (1) shall not apply to the discharge of a loan made by an organization described in paragraph (2)(D) if the discharge is on account of services performed for either such organization. In the case of an individual, gross income shall not include any amount received under section 338B(g) of the Public Health Service Act, under a State program described in section 338I of such Act, or under any other State loan repayment or loan forgiveness program that is intended to provide for the increased availability of health care services in underserved or health professional shortage areas (as determined by such State). pursuant to subsection (a) or (d) of section 437 of the Higher Education Act of 1965 or the parallel benefit under part D of title IV of such Act (relating to the repayment of loan liability), pursuant to section 464(c)(1)(F) of such Act, or otherwise discharged on account of death or total and permanent disability of the student. a student loan (as defined in paragraph (2)), or a private education loan (as defined in section 140(a) of the Consumer Credit Protection Act ( 15 U.S.C. 1650(a) ). 1 1 So in original. A third closing parenthesis probably should appear. Subparagraph (A) shall not apply with respect to any discharge during any taxable year unless the taxpayer includes the taxpayer’s social security number on the return of tax for such taxable year. For purposes of this subparagraph, the term “social security number” has the meaning given such term in section 24(h)(7). Subparagraph (C) of subsection (a)(1) shall apply only if the discharge is by a qualified person. For purposes of subparagraph (A), the term “qualified person” has the meaning given to such term by section 49(a)(1)(D)(iv); except that such term shall include any Federal, State, or local government or agency or instrumentality thereof. such indebtedness was incurred directly in connection with the operation by the taxpayer of the trade or business of farming, and 50 percent or more of the aggregate gross receipts of the taxpayer for the 3 taxable years preceding the taxable year in which the discharge of such indebtedness occurs is attributable to the trade or business of farming. the adjusted tax attributes of the taxpayer, and the aggregate adjusted bases of qualified property held by the taxpayer as of the beginning of the taxable year following the taxable year in which the discharge occurs. For purposes of subparagraph (A), the term “adjusted tax attributes” means the sum of the tax attributes described in subparagraphs (A), (B), (C), (D), (F), and (G) of subsection (b)(2) determined by taking into account $3 for each $1 of the attributes described in subparagraphs (B), (C), and (G) of subsection (b)(2) and the attribute described in subparagraph (F) of subsection (b)(2) to the extent attributable to any passive activity credit carryover. For purposes of this paragraph, the term “qualified property” means any property which is used or is held for use in a trade or business or for the production of income. For purposes of this paragraph, the adjusted basis of any qualified property and the amount of the adjusted tax attributes shall be determined after any reduction under subsection (b) by reason of amounts excluded from gross income under subsection (a)(1)(B). The amount excluded from gross income by reason of subsection (a)(1)(E) shall be applied to reduce (but not below zero) the basis of the principal residence of the taxpayer. For purposes of this section, the term “qualified principal residence indebtedness” means acquisition indebtedness (within the meaning of section 163(h)(3)(B), applied by substituting “$750,000 ($375,000” for “$1,000,000 ($500,000” in clause (ii) thereof and determined without regard to the substitution described in section 163(h)(3)(F)(i)(II)) with respect to the principal residence of the taxpayer. Subsection (a)(1)(E) shall not apply to the discharge of a loan if the discharge is on account of services performed for the lender or any other factor not directly related to a decline in the value of the residence or to the financial condition of the taxpayer. If any loan is discharged, in whole or in part, and only a portion of such loan is qualified principal residence indebtedness, subsection (a)(1)(E) shall apply only to so much of the amount discharged as exceeds the amount of the loan (as determined immediately before such discharge) which is not qualified principal residence indebtedness. For purposes of this subsection, the term “principal residence” has the same meaning as when used in section 121. in the case of a reacquisition occurring in 2009, the fifth taxable year following the taxable year in which the reacquisition occurs, and in the case of a reacquisition occurring in 2010, the fourth taxable year following the taxable year in which the reacquisition occurs. accrues before the 1st taxable year in the 5-taxable-year period in which income from the discharge of indebtedness attributable to the reacquisition of the debt instrument is includible under paragraph (1), and does not exceed the income from the discharge of indebtedness with respect to the debt instrument being reacquired, and the aggregate amount of deductions disallowed under clause (i) shall be allowed as a deduction ratably over the 5-taxable-year period described in clause (i)(I). For purposes of subparagraph (A), if any debt instrument is issued by an issuer and the proceeds of such debt instrument are used directly or indirectly by the issuer to reacquire an applicable debt instrument of the issuer, the debt instrument so issued shall be treated as issued for the debt instrument being reacquired. If only a portion of the proceeds from a debt instrument are so used, the rules of subparagraph (A) shall apply to the portion of any original issue discount on the newly issued debt instrument which is equal to the portion of the proceeds from such instrument used to reacquire the outstanding instrument. a C corporation, or any other person in connection with the conduct of a trade or business by such person. The term “debt instrument” means a bond, debenture, note, certificate, or any other instrument or contractual arrangement constituting indebtedness (within the meaning of section 1275(a)(1)). the debtor which issued (or is otherwise the obligor under) the debt instrument, or a related person to such debtor. The term “acquisition” shall, with respect to any applicable debt instrument, include an acquisition of the debt instrument for cash, the exchange of the debt instrument for another debt instrument (including an exchange resulting from a modification of the debt instrument), the exchange of the debt instrument for corporate stock or a partnership interest, and the contribution of the debt instrument to capital. Such term shall also include the complete forgiveness of the indebtedness by the holder of the debt instrument. The determination of whether a person is related to another person shall be made in the same manner as under subsection (e)(4). clearly identifies such instrument, and includes the amount of income to which paragraph (1) applies and such other information as the Secretary may prescribe. Such election, once made, is irrevocable. In the case of a partnership, S corporation, or other pass-thru entity, the election under this subsection shall be made by the partnership, the S corporation, or other entity involved. If a taxpayer elects to have this subsection apply to an applicable debt instrument, subparagraphs (A), (B), (C), and (D) of subsection (a)(1) shall not apply to the income from the discharge of such indebtedness for the taxable year of the election or any subsequent taxable year. In the case of the death of the taxpayer, the liquidation or sale of substantially all the assets of the taxpayer (including in a title 11 or similar case), the cessation of business by the taxpayer, or similar circumstances, any item of income or deduction which is deferred under this subsection (and has not previously been taken into account) shall be taken into account in the taxable year in which such event occurs (or in the case of a title 11 or similar case, the day before the petition is filed). The rule of clause (i) shall also apply in the case of the sale or exchange or redemption of an interest in a partnership, S corporation, or other pass-thru entity by a partner, shareholder, or other person holding an ownership interest in such entity. In the case of a partnership, any income deferred under this subsection shall be allocated to the partners in the partnership immediately before the discharge in the manner such amounts would have been included in the distributive shares of such partners under section 704 if such income were recognized at such time. Any decrease in a partner’s share of partnership liabilities as a result of such discharge shall not be taken into account for purposes of section 752 at the time of the discharge to the extent it would cause the partner to recognize gain under section 731. Any decrease in partnership liabilities deferred under the preceding sentence shall be taken into account by such partner at the same time, and to the extent remaining in the same amount, as income deferred under this subsection is recognized. extending the application of the rules of paragraph (5)(D) to other circumstances where appropriate, requiring reporting of the election (and such other information as the Secretary may require) on returns of tax for subsequent taxable years, and rules for the application of this subsection to partnerships, S corporations, and other pass-thru entities, including for the allocation of deferred deductions. The amendment made by subsection (a) [amending this section] shall apply to discharges of indebtedness after December 31, 2014 . The amendment made by subsection (b) [amending this section] shall apply to discharges of indebtedness after December 31, 2015 .” Except as provided in paragraph (2), the amendment made by this section [amending this section] shall apply to discharges of indebtedness after October 11, 2001 , in taxable years ending after such date. The amendment made by this section shall not apply to any discharge of indebtedness before March 1, 2002 , pursuant to a plan of reorganization filed with a bankruptcy court on or before October 11, 2001 .” Except as otherwise provided in this paragraph, the amendments made by this subsection [amending this section and section 382 of this title ] shall apply to stock transferred after December 31, 1994 , in satisfaction of any indebtedness. The amendments made by this subsection shall not apply to stock transferred in satisfaction of any indebtedness if such transfer is in a title 11 or similar case (as defined in section 368(a)(3)(A) of the Internal Revenue Code of 1986) which was filed on or before December 31, 1993 .” Except as provided in paragraph (2), the amendments made by this section [amending this section and section 1275 of this title ] shall apply to debt instruments issued, and stock transferred, after October 9, 1990 , in satisfaction of any indebtedness. is in a title 11 or similar case (as defined in section 368(a)(3)(A) of the Internal Revenue Code of 1986) which was filed on or before October 9, 1990 , is pursuant to a written binding contract in effect on October 9, 1990 , and at all times thereafter before such issuance or transfer, is pursuant to a transaction which was described in documents filed with the Securities and Exchange Commission on or before October 9, 1990 , or the material terms of which were described in a written public announcement on or before October 9, 1990 , which was the subject of a prior filing with the Securities and Exchange Commission, and which is the subject of a subsequent filing with the Securities and Exchange Commission before January 1, 1991 .” Except as otherwise provided in this subsection, the amendment made by subsection (a) [amending this section] shall apply to transfers after the date of the enactment of this Act [ July 18, 1984 ] in taxable years ending after such date. pursuant to a written contract requiring such transfer which was binding on the corporation at all times on June 7, 1984 , and at all times after such date but only if the transfer takes place before January 1, 1985 , and only if the transferee held the debt at all times on June 7, 1984 , or pursuant to the exercise of an option to exchange debt for stock but only if such option was in effect at all times on June 7, 1984 , and at all times after such date and only if at all times on June 7, 1984 , the option and the debt were held by the same person. such transfer is to another corporation which at all times on June 7, 1984 , owned 75 percent or more of the total value of the stock of the corporation making such transfer, and immediately after such transfer, the transferee corporation owns 80 percent or more of the total value of the stock of the transferor corporation. such transfer is covered by a debt restructure agreement entered into by the corporation during November 1983, and such agreement was specified in a registration statement filed with the Securities and Exchange Commission by the corporation on March 7, 1984 .” Except as provided in paragraph (2), the amendments made by section 2 [amending this section and sections 111, 118, 382, 703 and 1017 of this title] shall apply to any transaction which occurs after December 31, 1980 , other than a transaction which occurs in a proceeding in a bankruptcy case or similar judicial proceeding (or in a proceeding under the Bankruptcy Act) [Title 11, Bankruptcy] commencing on or before December 31, 1980 . section 108(b)(2) of the such Code (relating to reduction of tax attributes), as so amended, shall be applied without regard to subparagraphs (A), (B), (C), and (E) thereof, and the basis of any property shall not be reduced under section 1017 of such Code (relating to reduction in basis in connection with discharges of indebtedness), as so amended, below the fair market value of such property on the date the debt is discharged. The amendments made by section 3 [enacting sections 1398 and 1399 of this title and amending sections 443, 6012 and 6103 of this title] shall apply to any bankruptcy case commencing more than 90 days after the date of the enactment of this Act [ Dec. 24, 1980 ]. The amendments made by section 4 [enacting section 370 of this title and amending sections 354, 355, 357, 368 and 381 of this title] shall apply to any bankruptcy case or similar judicial proceeding commencing after December 31, 1980 . which occurs after December 31, 1980 , and which does not occur in a bankruptcy case or similar judicial proceeding (or in a proceeding under the Bankruptcy Act) commenced on or before December 31, 1980 . The amendments made by subsection (a) of section 5 [amending section 542 of this title ] shall apply to any bankruptcy case or similar judicial proceeding commenced after December 31, 1980 . The amendments made by subsection (b) of section 5 [amending section 302 of this title ] shall apply to stock which is issued after December 31, 1980 (other than stock issued pursuant to a plan of reorganization approved on or before that date). The amendment made by subsection (c) of section 5 [amending section 337 of this title ] shall apply to any bankruptcy case or similar judicial proceeding commenced after December 31, 1980 . The amendment made by subsection (d) of section 5 [amending section 1371 of this title ] shall apply to any bankruptcy case commenced on or after October 1, 1979 . The amendments made by subsection (e) of section 5 [amending section 351 of this title ] shall apply as provided in subsection (a) of this section. The amendment made by subsection (f) of section 5 [amending section 312 of this title ] shall apply as provided in subsection (a) of this section. The amendments made by section 6 [enacting sections 6658 and 7464 of this title, amending sections 128, 354, 422, 1023, 3302, 6012, 6036, 6155, 6161, 6212, 6213, 6216, 6326 [now 6327], 6404, 6503, 6512, 6532, 6871, 6872, 6873, 7430, and 7508 of this title, repealing section 1018 of this title , and redesignating former section 7464 of this title as 7465] shall take effect on October 1, 1979 , but shall not apply to any proceeding under the Bankruptcy Act [Title 11] commenced before October 1, 1979 . The debtor (or debtors) in a bankruptcy case or similar judicial proceeding may (with the approval of the court) elect to apply subsections (a), (c), and (d) by substituting ‘ September 30, 1979 ’ for ‘ December 31, 1980 ’ each place it appears in such subsections. Any election made under paragraph (1) with respect to any proceeding shall apply to all parties to the proceeding. Any election under this subsection may be revoked only with the consent of the Secretary of the Treasury or his delegate. Any election under this subsection shall be made at such time, and in such manner, as the Secretary of the Treasury or his delegate may by regulations prescribe. The term ‘bankruptcy case’ means any case under title 11 of the United States Code (as recodified by Public Law 95–598 ). The term ‘similar judicial proceeding’ means a receivership, foreclosure, or similar proceeding in a Federal or State court (as modified by section 368(a)(3)(D) of the Internal Revenue Code of 1986).” gross income shall not include any amount which (but for this section) would be includible in gross income by reason of the discharge (in whole or in part) of indebtedness of any taxpayer if the discharge is by reason of the death of an individual incurred as the result of the terrorist attacks against the United States on September 11, 2001 , or as the result of illness incurred as a result of an attack involving anthrax occurring on or after September 11, 2001 , and before January 1, 2002 ; and return requirements under section 6050P of such Code shall not apply to any discharge described in paragraph (1). This section shall apply to discharges made on or after September 11, 2001 , and before January 1, 2002 .”