I'm going to argue the logic in some of those arguments made in that Ryan Carey paper.
A bow to FlaCorps for such excellent research too!!
Logic dictates that one cannot have IMPUTED INCOME and still owe the debt. If you still owe the debt, then the "note" or whatever that represents the debt (a thing of value, real or ethereal) has not changed hands.
You sell me a thing, I give you an IOU of some form. If merely having exchanged a "thing" for a promise/note/debt acknowledgement generates imputed income, then everyone who mortgages a home, or buys a car on credit, etc, owes the IRS a <removed>load of money in imputed income.
Obviously they don't, so it isn't the case. The imputed income is generated at the point where it is clear the debtor will NOT be paying whatever the terms call for to the creditor. Only at THAT point is there imputed income.
Now, if you file a 1099C and the debtor now suddenly has imputed income that they are liable for, some event has occured out side of simply owing a debt. They owed the debt for all the time before the 1099C and yet had no imputed income until... the 1099C was filed.
So logically, the debtor gained imputed income from the act of the creditor DISCHARGING the debt to the IRS with the form 1099C. The creditor gets to write the debt off its own taxes, and the debtor is on the hook to the IRS for the taxes due on the imputed income.
You simply cannot OWE taxes on the imputed income AND also owe the debt to the creditor... otherwise everyone this second owes the IRS taxes on the imputed income of the "debts" they owe, to whomever for whatever reason. OR, the 1099C is an event that causes the relationship of the debt to change.
Cannot be both ways, it is utterly illogical and in-equitable for such a conundrum to exist.
Any judge finding otherwise is a fool or an idiot.