Hastings International and Comparative Law Review


This Article examines the United States income tax implications of debt-for-equity swaps. It focuses on Revenue Ruling 87-124 and describes its application to debt conversions. The Article also considers alternatives available to United States taxpayers in dealing with the potentially adverse consequences of Revenue Ruling 87-124, including arguments which could be raised during the course of an audit or a legal challenge. The Article concludes with a possible manner in which the debt-for-equity swap can be restructured to avoid Revenue Ruling 87- 124.