[16686]
October 20, 2003
TO: TAX COMMITTEE No. 68-03
RE: DRAFT PAPER ON TAX TREATMENT OF DISTRESSED DEBT
Attached is a draft paper on the tax treatment of distressed and speculative debt. The
paper discusses several areas where the applicable law is unclear, and on which guidance could
be requested from the IRS, including the nonaccrual of OID, the timing and character of
charged-off coupon interest, and the allocation of amounts received on disposition of distressed
and speculative debt to interest, OID, and principal (including market discount).
The Tax Committee will discuss this draft paper at the subcommittee meeting on
October 29, 2003 or at the full committee meeting on October 30, 2003.
David Orlin
Assistant Counsel
Attachment (in .pdf format)