A Note from the Editors-in-Chief

The column discusses CCA 201843009, which addresses the question of whether tax-exempt bonds can be issued to do an "advance refunding" of an issue of taxable bonds. The article considers a hypothetical transaction in which a taxpayer holds an entire issue of high-coupon fixed-rate municipal bonds and simultaneously enters into an interest rate swap with the issuer. [...]it covers when a transfer is a sale or financing (under tax law, GAAP, and commercial law), entity classification (with some specialized topics like when there is an entity, who is an owner, the classification of commercial trusts, when disregarded entities are in fact recognized, series companies, and when there is a "financial business" that knocks you out of the passive income exception in Code Sec. 7704), a comparison of the tax treatment of grantor trusts and partnerships, the treatment of debt instruments (with lots of subtopics, including, for example, the treatment of distressed debt and debt modifications), a number of international topics (TEFRA registration, the portfolio interest exemption and withholding taxes more generally, FATCA (there is a summary for those who want an introduction, and practical comments on how it works for passive companies), and the treatment of CLOs and other passive foreign corporations, including an extended discussion of loan origination activities and ECI), mark to market rules under Code Sec. 475, information reporting for different types of entities and instruments, reportable transactions, etc.