Interbank Offered Rates (IBORs), including the London Interbank Offered Rate (LIBOR), serve as widely accepted benchmark interest rates that represent the cost of short-term, unsecured, wholesale borrowing by large globally active banks.
For US federal tax purposes, the main consideration for replacing an interbank offered rate (IBOR) with a fallback rate (like SOFR) is that this alteration could result in a deemed exchange of the instrument (resulting in tax implications for both the issuer and the holder of the instrument).
We’ll break down the guidance for addressing the US federal tax consequences of replacing an IBOR with a successor rate into three areas:
- Older rules for addressing the US tax consequences for amendments to debt in general
- Treasury Regulations initially proposed in 2019, and
- An IRS Revenue Procedure released in 2020
Join our experts for a free, Intelligize-sponsored CLE* webinar: IBOR Transition: Current Status of US Federal Tax Guidance (Wednesday, May 12, 2021 at 11 a.m. EDT).
In this session, you will:
- Gain (or refresh) an understanding of the general federal tax considerations applicable to amending debt instruments
- Understand Treasury guidance (including proposed regulations) addressing the US federal tax considerations for replacing an interbank offered rate with a fallback rate or adding a fallback rate to an existing instrument, along with some open points left unaddressed by the regulations
- Understand the latest IRS guidance on this subject
Partner, Mayer Brown
Associate, Mayer Brown
*CLE is approved or in the process of approval for CLE credit. The type of credit allowed will be determined by the state governing MCLE Board. Contact email@example.com regarding state accreditation status. NOTE: If you are licensed in New York, this content is appropriate for both newly admitted and experienced New York attorneys. Although, this content is appropriate for all New York attorneys, newly admitted attorneys cannot earn CLE credit for the completion of the course when presented via webinar or webcast.