Firm Memoranda

New IRS Revenue Procedure Provides Some Relief From AHYDO Rules Where AHYDO Status Would Otherwise Result From Adverse Market Conditions

Date: 08/12/08

On August 8, 2008, the Internal Revenue Service ("IRS") released Revenue Procedure 2008-51, which provides some relief from the applicable high yield discount obligation ("AHYDO") rules where AHYDO status would otherwise result from certain adverse market conditions. The Revenue Procedure addresses one tax-related impediment to achieving a later syndication/resale of debt instruments that could not be successfully syndicated at the time of funding, but does not address another significant tax issue that often arises in this context - the possible recognition by the issuer of cancellation of indebtedness income ("COD Income").

New IRS Revenue Procedure Provides Some Relief From AHYDO Rules Where AHYDO Status Would Otherwise Result From Adverse Market Conditions.pdf (pdf | 139.55 KB )