Tax Implications of Debt-for-Equity Swaps

Authors

Stuart M. Berkson
Bruce A. Cohen

Abstract

This Article examines the United States income tax implications of debt-for-equity swaps. It focuses on Revenue Ruling 87-124 and describes its application to debt conversions. The Article also considers alternatives available to United States taxpayers in dealing with the potentially adverse consequences of Revenue Ruling 87-124, including arguments which could be raised during the course of an audit or a legal challenge. The Article concludes with a possible manner in which the debt-for-equity swap can be restructured to avoid Revenue Ruling 87- 124.

Recommended Citation

Stuart M. Berkson and Bruce A. Cohen, Tax Implications of Debt-for-Equity Swaps, 12 Hastings Int'l & Comp. L. Rev. 575 (1989).
Available at: https://repository.uclawsf.edu/hastings_international_comparative_law_review/vol12/iss3/3