Debt v. Equity: Current Criteria for Distinguishing
Loading...
Authors
Murray, Robert J.
Issue Date
1971
Volume
4
Issue
Type
Journal Article
Language
Keywords
Alternative Title
Abstract
FIRST PARAGRAPH(S)|When the Internal Revenue Code of 1954 was under consideration Congress sought to identify the criteria which would determine whether an investment represented a debt or equity. However, the Senate Finance Committee was reluctant to define stock, common stock and securities because of the multitude of forms that such items might take. In considering the Tax Reform Act of 1969 Congress recognized the problems resulting from the lack of precise definitions in this area but did not remedy the situation. The 1969 enactment created section 385 of the Internal Revenue Code which authorizes the Secretary of the Treasury or his delegate to prescribe regulations as may be necessary or appropriate to determine whether an interest in a corporation is to be treated, for tax purposes, as stock or indebtedness. Subsection (b) provides: The regulations prescribed under this section shall set forth factors which are to be taken into account in determining with respect to a particular situation whether a debtor-creditor relationship exists or a corporation-shareholder relationship exists...
Description
Citation
4 Creighton L. Rev. 5 (1970-1971)
Publisher
Creighton University School of Law