A partnership has $1 million in unpaid trade accounts payable and no assets, with judgements against it by the vendors for the $1 million of trade ap. The partnership is winding up and preparing its final Form1065.
When the partnership reports the $1 million of income out to its partners on final K-1s, are there cases where the income can be reported as a type of income the partner can get out of reporting as taxable, by inciting the "insolvent outside of bankruptcy" exception to recognizing income from debt relief?