On August 7, 2017, TEI submitted comments to the Internal Revenue Service on the final and temporary regulations under section 385 (T.D. 9790, 81 Fed. Reg. 72,858) concerning the treatment of certain interests in corporations as stock or indebtedness. Our comments were made in response to Notice 2017-38, Implementation of Executive Order 13789 (Identifying and Reducing Tax Regulatory Burdens), which requested comments on whether certain tax regulations should be rescinded or modified, and in the latter case, how the regulations should be modified in order to reduce burdens and complexity. Our recommendations to the government were twofold: (i) suspend the application of the intercompany debt documentation requirements in Treas. Reg. § 1.385-2 pending further refinement of their scope; and (ii) withdraw and thoroughly reconsider the transaction rules under Treas. Reg. §§ 1.385-3 and -3T.
TEI’s comments were prepared under the aegis of the Institute’s Federal Tax Committee. Watson M. McLeish, Tax Counsel for the Institute, coordinated the preparation of TEI’s comments.