H&K | Foreign Investment in Distressed Debt—Achieving U.S. Tax Benefits While Avoiding Pitfalls

Taxation Partner Seth Entin wrote an article published in Bloomberg Tax discussing potential U.S. federal income tax opportunities and challenges for foreign investors in U.S. distressed debt. Foreign investors may earn interest income on debt issued by U.S. borrowers and may even gain from the sale or retirement of these debt instruments, free of U.S. federal income tax, as long as certain conditions are met. Mr. Entin’s article outlines the rules favorable to investors and describes the potential pitfalls that could cause them to be subject to U.S. tax.

READ: INSIGHT: Foreign Investment in Distressed Debt—Achieving U.S. Tax Benefits While Avoiding Pitfalls

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