On October 8, 2019, the Treasury Department and IRS issued proposed regulations confirming that transitions from LIBOR and other interbank offered rates (IBORs) to alternative reference rates in debt instruments and derivatives will not be taxable events. This guidance was eagerly anticipated because countless instruments will have to be amended to provide for new reference rates before IBORs are phased out as early as the end of 2021. If these amendments were treated as significant modifications for U.S. tax purposes, they could have severely adverse consequences for market participants. We previously summarized some of these consequences here and in an industry group letter to the IRS co-authored by tax partners Jason Schwartz and Gary Silverstein.
