February 22, 1991
TO: TAX MEMBERS NO. 5-91
ACCOUNTING/TREASURERS MEMBERS NO. 6-91
RE: IRS NOTICE ON CONTINGENT INSTRUMENTS
__________________________________________________________
The attached IRS Notice states that the IRS will soon issue
proposed regulations regarding debt instruments that provide for
contingent payments, such as payments which depend upon the
performance of an index of publicly traded stock. The effect of
these amendments to section 1.1275-4 of the proposed regulations
will be to divide debt instruments of this type into their
component parts and tax each component as it would have been
taxed had it been issued as a separate instrument. The
amendments will be proposed to be effective for debt instruments
issued on or after February 20, 1991.
We will keep you informed of developments.
Keith D. Lawson
Associate Counsel - Tax
Attachment
KDL:bmb