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New Information Reporting Requirements Effective January 1st

Berdon Tax Team 01.11.2016 | eVisor

Issuers of securities are generally required to file Form 8937 to report actions that affect the basis of issued securities.  Rules effective on January 1, 2014, required issuers to report modifications to their debt.  The rules had ten categories of exemptions which no longer apply to debt modifications that occur on or after January 1, 2016.

Here are two examples of the impact of the new requirements:

The original rules contained an exemption if debt was evidenced by a physical certificate. For example, if a company issued a note or mortgage, any debt modification was exempt. This exemption resulted in very few issuers having to file Form 8937 to report debt modifications. Since the exemption for physical certificates has expired, many issuers will need to report their debt modifications.

  • The original rules also contained an exemption for foreign issuers which also expired.  Currently, there does not appear to be an exemption for foreign issuers that have no US activity. There is an exemption if 100% of the holders of a security are exempt recipients. Most foreign holders are considered exempt recipients.  As a result, a foreign issuer of debt will generally be required to file a Form 8937 to report a debt modification if there is a single US holder.

Forms 8937 are generally required to be filed within 45 days of a debt modification.

Questions? Contact your Berdon advisor. Berdon LLP New York Accountants

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