On 31 October 2019, the US treasury department issued final regulations (TD 9880), repealing section 385, which sets out minimum documentation requirements that must normally be met in order for certain related-party interests in a corporation to be treated as indebtedness for Federal tax purposes. The final regulations generally affect corporations that issue purported indebtedness to related corporations or partnerships.
On October 21, 2016, the Treasury Department and the IRS published final and temporary regulations (T.D. 9790) under section 385 in the Federal Register (81 FR 72858). The final and temporary regulations under section 385 include rules set forth in § 1.385-2, which establish minimum documentation requirements that ordinarily must be satisfied in order for purported debt obligations among related parties to be treated as debt for Federal tax purposes (that is, the Documentation Regulations). The removal is effective as of November 4, 2019.
