Section 385 in the US tax code governs the determination of interests in a corporation as debt or equity. There have been no regulations under section 385 for more than 25 years. In an effort to curb specific related-party debt transactions undertaken in the cross-border context, the US Treasury Department and the US Internal Revenue Service proposed new rules under section 385 that, among other effects, convert certain related-party instruments otherwise classified as debt into stock. Please join Mayer Brown Tax Transactions & Consulting partners Russell Nance and Steven Garden for an overview of the regulatory framework introduced by these proposed regulations, the effective dates, and these rules’ impact on the financial market.
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Mayer Brown’s Global Financial Markets Initiative helps clients deal with the legal and business challenges resulting from the ongoing turbulence in worldwide financial markets. By mobilizing the firm’s global resources from multiple practices and offices, the initiative provides clients with knowledgeable and timely counsel on a broad spectrum of their legal needs.