federal income tax rules.Ī covered modification is limited to certain modifications to contracts referencing a “discontinued IBOR” in connection with transitioning to a “qualified rate.” Thus, the Final Regulations provide certainty with respect to covered modifications even if such modifications arguably would not have resulted in an exchange of property under the generally applicable U.S. federal income tax purposes even if such a modification would otherwise be treated as an exchange of property under the generally applicable U.S. The Final Regulations generally provide that a “covered modification” is not treated as an exchange of property for U.S. modifying the rules from the Proposed Regulations concerning one-time payments and associated modifications.providing guidance on modifications that add multiple fallback rates, and.eliminating the fair market value requirement from the Proposed Regulations,.While making simplifying changes to the operative regulatory language, the Final Regulations generally follow the substantive results proscribed in the proposed regulations issued on Octo(the Proposed Regulations) with certain notable changes, including: On December 30, 2021, the Department of the Treasury (Treasury) and the Internal Revenue Service (IRS) released final regulations (the Final Regulations) regarding the tax consequences of certain modifications to debt instruments, derivatives and other contracts as part of the transition away from the London Interbank Offered Rate (LIBOR) and certain other interbank offered rates (IBORs).
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