 Ambridge’s Tax Insurance policies can be utilized to address concerns about the characterization of an instrument for tax purposes as debt or equity as most taxing authorities view this as highly facts and circumstances based determination, and as such a matter for which they will generally not issue private letter rulings. From the perspective of the issuer of an instrument, the characterization of an instrument as debt or equity can be important for reasons including the fact that there is a deduction for interest, withholding tax exemptions, and cancellation of indebtedness income. From the perspective of a holder, the characterization of an instrument as debt or equity can be important for reasons including that there is a low individual tax rate on dividends and foreign corporate dividends may carry a foreign tax credit.
For an example of how Ambridge’s Tax Insurance product can be used in connection with a concern over the characterization of an instrument as debt or equity, please click here. |
