Examples of Contingent Payment Regulations in a sentence
Even if the Contingent Payment Regulations do not apply to the notes, other alternative U.S. federal income tax characterizations of the notes are possible which, if applied, also could affect the timing and the character of a U.S. Holder’s income or loss.
Any gain or loss generally will be capital gain or loss (subject to the market discount rules discussed below), unless the New Secured Note is subject to the Contingent Payment Regulations and is sold or otherwise disposed of when there are remaining contingent payments due on the note under the projected payment schedule.
Also, if the IRS were successful in asserting that the Notes were subject to the Contingent Payment Regulations, the timing and character of income thereon would be affected.
For United States federal income tax purposes, a holder must use the comparable yield and projected payment schedule in determining the amount and accrual of OID, unless the holder explicitly discloses in accordance with the Contingent Payment Regulations its differing position.
Holders are strongly urged to consult their tax advisors with respect to the application of the Contingent Payment Regulations described above to the New Secured Term Notes.