On April 8, 2011, the Internal Revenue Service (“IRS”) published Revenue Procedure 2011-29 (the “Revenue Procedure”) adopting a safe-harbor election whereby taxpayers may elect to deduct 70% of “success-fees” incurred in connection with certain capital restructurings and acquisitions or reorganizations.

Treasury regulations currently provide that certain costs incurred by a taxpayer in connection with certain capital restructurings and acquisitions or reorganizations must be capitalized rather than currently deducted for federal income tax purposes. Specifically, the capitalization rule applies to the following transactions: (1) an acquisition of assets that constitute a trade or business (whether the taxpayer is the acquirer in the acquisition or the target of the acquisition), (2) an acquisition by the taxpayer of an ownership interest in a business entity if, immediately after the acquisition, the taxpayer and the business entity are related for certain federal income tax purposes, (3) an acquisition of an ownership interest in the taxpayer (other than an acquisition by the taxpayer of an ownership interest in the taxpayer, whether by redemption or otherwise), (4) a restructuring, recapitalization, or reorganization of the capital structure of a business entity, (5) certain transfers to a corporation controlled by the transferor and certain transfers to a partnership (whether the taxpayer is the transferor or transferee), (6) a formation or organization of a disregarded entity, (7) an acquisition of capital, (8) a stock issuance, (9) a borrowing (including certain exchanges or modifications of debt), and (10) writing an option.