The document outlines topics to consider regarding legal and tax issues for distressed assets, including pitfalls and opportunities for sellers and buyers of underwater assets, partnership workouts, tax issues in bankruptcy, and updates to California tax laws. Specific topics discussed include loan restructuring, tax liabilities during due diligence, cancellation of debt income, reduction of tax attributes in bankruptcy, and recent California legislation. The document was presented at a commercial distressed assets conference by an attorney from a law firm specializing in tax and business law.

1. Pitfalls and opportunities in distressed assets - legal & tax panel Roger Royse Royse Law Firm, PC 1717 Embarcadero Road Palo Alto, CA 94303 rroyse@rroyselaw.com www.rroyselaw.com www.rogerroyse.com Skype: roger.royse Commercial Distressed Assets & Opportunities Conference April 27, 2011 IRS Circular 230 Disclosure: To ensure compliance with the requirements imposed by the IRS, we inform you that any tax advice contained in this communication, including any attachment to this communication, is not intended or written to be used, and cannot be used, by any taxpayer for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to any other person any transaction or matter addressed herein.

2. 2 Topics for Consideration Sellers / Owners of Underwater Assets Buyers / Investors in Underwater Assets Partnership Workouts Tax Issues in Bankruptcy Update on California Tax Laws

3. 3 Sellers / Owners of Underwater Assets Loan Restructuring Third Party Investment Tax Rate Changes Abandonment / Loss / Worthlessness Foreclosure / Bankruptcy / Liens

4. 4 Buyers / Investors in Underwater Assets Tax Liabilities in Due Diligence Section 382 Limitations Tax Issues in Sales Debt Investments Related Party Purchases / Investments

5. 5 Partnership Workouts Cancellation of Debt (COD) Income Discharge of Liabilities Partner Debt Passive Activity Loss Limitation Rules At-Risk Loss Limitation Rules

6. 6 Tax Issues in Bankruptcy Tax Advantages of Bankruptcy Reduction of Tax Attributes Discharge as a Purchase Price Adjustment Priority tax claims are nondischargeable in bankruptcies involving individuals

7. 7 Update on California Tax Laws California SB 401 California SB 848 California Prop. 24

8. 8 PALO ALTO 1717 Embarcadero Rd. Palo Alto, CA 94303 LOS ANGELES 11150 Santa Monica Blvd. Suite 1200 Los Angeles, CA 90025 LOS ANGELES 10900 Wilshire Blvd. Suite 300 Los Angeles, CA 90024 SAN FRANCISCO 33 New Montgomery St. Suite 1530 San Francisco, CA 94105 www.rroyselaw.com