SECTION 3. SCOPE

This revenue procedure applies to the substitution of new debt for old debt if all of the following conditions are satisfied:

.01 Debt instruments from a single new issue are being substituted for debt instruments from two or more old issues of debt. (It is not necessary, however, for any single holder of the old debt to have held debt instruments from more than one of the old issues.)

.02 The substitution does not result in a significant modification of the old debt under § 1.1001–3 and, therefore, is not a realization event under § 1.1001–1.

.03 The new debt and the old debt are publicly traded (within the meaning of § 1.1273–2(f)).

.04 The old debt was issued at par or with a de minimis amount of original issue discount or premium. (For purposes of this condition, the de minimis amount for premium is determined using the principles of § 1.1273–1(d).)

.05 The new debt is issued at par or with a de minimis amount of original issue discount or premium. (For purposes of this condition, the issue price of the new debt is determined under § 1.1273–2 rather than under § 1.1275–2(j), and the de minimis amount for premium is determined using the principles of § 1.1273– 1(d).)

.01 Election.

(1) Manner of making the election. The issuer and the holders make the election under this revenue procedure by agreeing in writing to treat the substitution as a realization event for federal income tax purposes and to comply with the provisions of this revenue procedure. The written agreement must be entered into no later than the last day of the month in which the substitution occurs.

For example, the written agreement to make the election may be evidenced by a statement in the offering documents for the substitution that—

(a) the issuer, by distributing the documents, elects under this revenue procedure to treat the substitution as a realization event for federal income tax purposes,

(b) any holder of old debt that tenders its old debt for new debt as part of the substitution thereby makes the election under this revenue procedure, and

(c) the issuer and the holders who have tendered their old debt for the new debt (“electing holders”) will comply with the provisions of this revenue procedure.

(2) Statement attached to return. If an election is made under section 4.01(1) of this revenue procedure, the issuer must attach a signed statement to its timely filed (including extensions) federal income tax return for the taxable year in which the substitution occurs. On the statement, the issuer must—

.06 Neither the new debt nor the old debt is—

(1) a contingent payment debt instrument (within the meaning of § 1.1275–4),

(2) a tax-exempt obligation (as defined in § 1275(a)(3)), or

(3) a convertible debt instrument (within the meaning of § 1.1272–1(e)).

.07 All payments on the old debt and the new debt are denominated in, or determined solely by reference to, U.S. dollars, and the functional currency of the business unit issuing the new debt is the U.S. dollar.

.08 The issuer and one or more holders of the old debt make the election provided in section 4.01 of this revenue procedure.