On 21 September 2018, IRS published a document proposing to remove Section 385 from treasury regulation that was finalized in the last of the 2016. The regulations require multinationals that issue related-party debt to provide information to the IRS that establishes that the instrument should be treated as debt for tax purposes, rather than as equity.
On 14 April 2016, proposed regulations under Code Section 385 were issued but did not receive a warm welcome from the tax associations. After receiving detailed comments, treasury published final regulations effective from 21 October 2016, which met the strict documentation requirements. Treasury and the Internal Revenue Service (IRS) have now issued proposed regulations that eliminate the stringent documentation requirements. Written or electronic comments and requests for a public hearing must be received by the IRS by late December.
