n-19-58.pdf

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Temporary Regulations under Section 385 on the Treatment of Certain Interests in
Corporations as Stock or Indebtedness

Notice 2019-58

On October 21, 2016, the Treasury Department and the IRS published T.D. 9790
in the Federal Register (81 FR 72858), which included final and temporary regulations
under section 385 addressing documentation in §1.385-2 and certain debt that is issued
to a controlling shareholder in a distribution or in another related-party transaction in
§1.385-3. On the same date, the Treasury Department and the IRS also published a
notice of proposed rulemaking (REG-130314-16) in the Federal Register (81 FR 72751)
(the 2016 Proposed Regulations) by cross-reference to the temporary regulations under
section 385, which include §§1.385-3T and 1.385-4T (the Temporary Regulations).

The Temporary Regulations expire on October 13, 2019. See section 7805(e);
§1.385-3T(l); §1.385-4T(h). The 2016 Proposed Regulations are proposed to apply to
taxable years ending on or after January 19, 2017; in contrast to the Temporary
Regulations, the 2016 Proposed Regulations do not expire. A taxpayer may rely on the
2016 Proposed Regulations for periods following the expiration of the Temporary
Regulations until further notice is given, provided that the taxpayer consistently applies
the rules in the 2016 Proposed Regulations in their entirety.

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The principal author of this notice is Azeka J. Abramoff of the Office of Associate
Chief Counsel (International). For further information regarding this notice, contact Ms.
Abramoff at (202) 317-6938 (not a toll free call).