United States

Treasury and IRS to propose revoking debt documentation rules

Proposal would partially revoke section 385 debt-equity regulations


Treasury official Brett York stated that Treasury and the IRS plan to revoke the debt documentation requirements contained in regulations issued in October 2016 under section 385 of the Tax Code. Our article discussing the section 385 regulations is available here.

The documentation rules aren’t effective yet. As they stand, their delayed effective date is Jan. 1, 2019. If they become effective in their current form, they would impose significant recordkeeping burdens with respect to many related party loans.

In its Oct. 2, 2017 report on reducing tax regulatory burdens, Treasury previously recommended revoking the documentation rules. Our alert discussing the report is available here.

Speaking at a conference, Brett York of Treasury indicated that Treasury and the IRS may work on a set of replacement regulations if the documentation rules are revoked. He added, however, that any replacement regulations would likely be a long-term project.


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