rp-00-29.pdf

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# Part III

Administrative, Procedural, and Miscellaneous

26 CFR 601.601: Rules and regulations.

(Also Part I, §§ 1001; 1.1001-3, 1.1275-2.)

Rev. Proc. 2000-29

## SECTION 1. PURPOSE

In response to comments, this revenue procedure removes the sunset date in
Rev. Proc. 99-18, 1999-11 I.R.B. 7.

## SECTION 2. BACKGROUND

01 Rev. Proc. 99-18 provides an election that facilitates the substitution of
newly issued debt instruments for outstanding debt instruments. Under the election,
taxpayers can treat a substitution of debt instruments, in certain circumstances, as a
realization event for federal income tax purposes even though it does not result in a
significant modification under § 1.1001-3 of the Income Tax Regulations (and,
therefore, is not otherwise an exchange for purposes of § 1.1001-1(a)). Under section
4 of Rev. Proc. 99-18, taxpayers do not recognize any realized gain or loss on the date
of the substitution. Instead, the gain or loss generally is taken into account as income
or deductions over the term of the new debt instruments. Rev. Proc. 99-18 is effective
for substitutions that occur between March 1, 1999, and June 30, 2000.

.02 The Internal Revenue Service requested comments on Rev. Proc. 99-18,
including comments on whether the revenue procedure should be made permanent. In
response to the request for comments, taxpayers asked that Rev. Proc. 99-18 be made

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permanent. In addition, taxpayers asked for several other changes, including the
coordination of Rev. Proc. 99-18 with the regulations dealing with qualified reopenings
of debt instruments. See § 1.1275-2T(d) of the temporary Income Tax Regulations and
§ 1.1275-2(k) of the proposed Income Tax Regulations published in the Federal
Register on November 5, 1999 (64 Fed. Reg. 60395).

.03 This revenue procedure modifies only the effective period of Rev. Proc. 99-
18. The Treasury Department and the Internal Revenue Service plan to reconsider the
other provisions of Rev. Proc. 99-18 when the regulations dealing with qualified
reopenings are finalized.

## SECTION 3. APPLICATION

Section 5 of Rev. Proc. 99-18 is modified to read as lows: This revenue
procedure applies to substitutions that occur on or after March 1, 1999.

SECTION 4. EFFECT ON OTHER DOCUMENTS

Rev. Proc. 99-18, 1999-11 I.R.B. 7, is modified.

## SECTION 5. EFFECTIVE DATE

This revenue procedure is effective June 22, 2000.

### CONTACT PERSON

For further information regarding this revenue procedure, contact William E.
Blanchard of the Office of Assistant Chief Counsel (Financial Institutions and Products)
on (202) 622-3950 (not a toll-free call).