Debt Instruments with Original Issue Discount;
Contingent Payments; Anti-Abuse Rule

[4830-01-u] DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Parts 1 and 602 [TD 8674] RIN 1545-AQ86; 1545-AS35

TITLE: Debt Instruments with Original Issue Discount; Contingent Payments; Anti-Abuse Rule

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulations.

SUMMARY: This document contains final regulations relating to the tax treatment of debt instruments that provide for one or more contingent payments. This document also contains final regulations that treat a debt instrument and a related hedge as an integrated transaction. In addition, this document contains amendments to the original issue discount regulations, and finalizes the anti-abuse rule relating to those regulations. The final regulations in this document provide needed guidance to holders and issuers of contingent payment debt instruments.

DATES: Except as noted below, the regulations are effective August 13, 1996. The amendments to 1.1275-5 are effective June 14, 1996, except for paragraphs (a)(6), (b)(2), and (c)(1), which are effective August 13, 1996. The removal of 1.483-2T is effective June 14, 1996. The removal of 1.1275-2T is effective August 13, 1996. For dates of applicability of these regulations, see Effective Dates under Supplementary Information.

FOR FURTHER INFORMATION CONTACT: Concerning the regulations (other than 1.1275-6), William E. Blanchard, (202) 622-3950, or Jeffrey W. Maddrey, (202) 622-3940; or concerning 1.1275-6, Michael S. Novey, (202) 622-3900 (not toll-free numbers).

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