Unforeseeable events not within the control of a property owner may impose adverse tax consequences. For example, financial regulators may require changes to the terms of a debt instrument that result in a deemed exchange of the existing debt instrument for a modified debt instrument, and therefore, generally, in the recognition of gain or loss. Earlier this month, the Internal Revenue Service and Treasury published guidance regarding the tax treatment of certain events not within the control of investors: (1) the transition from interbank offered rates (such as LIBOR) in debt instruments and non-debt contracts to other reference rates; and (2) a “hard fork” with respect to cryptocurrency in which the owner receives units of new cryptocurrency.
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