Internal Revenue Bulletin: 2008-35
September 2, 2008
Proposed regulations under section 7508A of the Code clarify rules relating to the postponement of certain tax-related acts by reason of a Presidentially declared disaster or terroristic or military action. The regulations clarify the scope of relief under section 7508A and specify that interest may be suspended during the postponement period. These changes are necessary to reflect changes in the law made by the Victims of Terrorism Tax Relief Act and current IRS practice.
This notice requests comments with respect to possible expansion of regulations section 1.475(a)-4 (safe harbor valuation regulations) so that financial institutions headquartered outside the United States can qualify to make the election described in regulations section 1.475(a)-4(b).
This procedure provides that the Service will not treat the debt instrument, issued by a corporation pursuant to a binding financial commitment obtained from an unrelated lender that satisfies certain conditions, as an applicable high yield discount obligation (AHYDO) for purposes of sections 163(e)(5) and 163(i) of the Code. As a result, no portion of the corporation’s interest deductions attributable to the debt instrument will be disallowed under section 163(e)(5).
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