Taxable COD Income Now More Likely In Restructurings

Law360, New York (January 25, 2013, 11:58 AM EST) -- During the course of the financial crisis, many private equity professionals learned a bitter tax lesson — if the terms of a debt instrument are modified while the debt is considered “traded on an established market” for tax purposes, the issuer of the debt can have immediate taxable income if (and to the extent that) the face amount of the debt exceeds its trading price. Many fortunate taxpayers were able to escape large tax bills by concluding that the debt instrument being modified did not meet...
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