New guidance to taxpayers regarding the transition away from the London Interbank Offered Rate (LIBOR) provides much needed direction to market participants currently modifying contracts to address this important event.
Broadly, if certain requirements are satisfied, these modifications will not result in taxable exchanges of the contracts. Careful planning, along with good coordination between a taxpayer’s treasury and tax functions, are essential to provide that the transition away from LIBOR happens smoothly and without unexpected tax consequences.
Read a November 2020 report [PDF 169 KB] prepared by KPMG LLP: What’s News in Tax: Revenue Procedure 2020-44 Guidance on LIBOR-Related Contract Modifications Adopting Fallback Language
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