Transitions From IBOR to Alternative Rates Avoid Tax Under Proposed Regulations

摘要

Recently proposed U.S. treasury regulations confirm that replacing interbank offered rates with alternative reference rates in certain financial instruments will not be treated as taxable events for U.S. federal income tax purposes. The proposed regulations anticipate the elimination of LIBOR and the emergence of replacement benchmark rates in new and existing financial contracts. They are a welcome addition to the regulatory landscape as markets begin to transition substantial amounts of debt instruments and derivatives away from LIBOR and into alternative reference rates.