On July 7, MFA submitted a comment letter to Treasury and the IRS on the proposed rules regarding the treatment of certain interests as equity or debt. In our comment letter, we encouraged Treasury and the IRS to narrow the scope of its proposal to focus on the types of transactions of primary policy concern to avoid the adverse consequences of the broad proposed rules on a wide variety of other transactions and business structures. We also encouraged Treasury and the IRS to amend provisions relating to the definition of expanded groups and attribution rules, which we believe should be tailored to address investment fund structures that do not raise the policy concerns underlying the rules. We further encouraged Treasury and the IRS not to apply the rules to so-called blocker entities used by investment funds to preserve tax neutrality for investors, which also do not present the types of policy concerns underlying the rules.
