Treasury and IRS release Section 385 regulations

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October 2016


Today, the IRS and Treasury issued final and temporary regulations under Section 385, which address whether an interest in a related corporation is treated as stock or indebtedness (collectively the 'Regulations').  The Regulations, which replace the proposed regulations issued by the IRS and Treasury on April 4, 2016, are intended to limit the effectiveness of certain types of tax planning by characterizing related-party financings as equity, even if they are in form straight debt instruments.

PwC is in the process of reviewing the Regulations in detail.  Look for our published Insight on the Regulations, which will include a summary of the major changes, soon. 

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Pam Olson

Consultant, Tax Policy Services, PwC US

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