Buyer Beware: Key Tax Issues for Private Equity Investments in Distressed Debt

Foley Partner Peter J. Elias led an audio conference on May 21, 2009 hosted by The Beard Group Law and Business Publishers and The Troubled Company Reporter. The audio conference, titled “Buyer Beware: Key Tax Issues for Private Equity Investments in Distressed Debt”, addressed the following issues:

• Tax issues for purchases of debt by “related” parties
  
• New tax law developments relating to cancellation of debt income
  
• Important tax traps (and surprising consequences) for investors and borrowers arising in connection with debt modifications
  
• Ordinary income versus capital gain treatment for accrued “market discount” on discount debt purchased in secondary markets
  
• Accrual of interest income for holders of debt
  
• Timing rules and special elections available for debt holders
  
• Special rules applicable to purchases of deeply discounted debt, such as defaulted debt
  
• Special tax rules and risks posed for non-U.S. investors in distressed debt funds

For more information on the program, please visit The Beard Group Law and Business Publishers Web site.