LIBOR Transition and Tax Issues

U.S. tax considerations for a smooth LIBOR transition

By the end of 2021, LIBOR will be replaced with a variety of alternative rates. This transition presents significant tax issues and opportunities, in addition to operational changes.

Changing the interest rate index referenced in a contract from LIBOR to the replacement benchmark raises a number of U.S. tax questions, including whether there is a taxable exchange of the contract. The government provided some clarity through proposed regulations released in late 2019, but the practical application of these rules is not straightforward. Affected organizations should act now to prepare for the end of LIBOR.

LIBOR Transition and Tax Issues
This overview discusses how to prepare for the end of LIBOR and the significant tax issues and opportunities it presents. A top 10 FAQs list is provided too.