The Proposed Regulations allow existing debt and non-debt contracts that now reference LIBOR and other Interbank Offered Rates (IBORs) to transition toward alternative reference rates without triggering tax.

Key Points:

..Amendments to terms of instruments necessary to transition from IBORs generally do not result in a tax event, as long as the fair market value of the amended instrument is substantially equivalent to its fair market value prior to the amendment.

..The Proposed Regulations provide two safe harbors for determining the fair market values of instruments.

..Other amendments that are not necessary to transition from IBORs are analyzed under the generally applicable rules.