AHYDO

AcronymDefinition
AHYDOApplicable High Yield Discount Obligation
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References in periodicals archive ?
While significant OID is one of the cornerstones of the AHYDO rules, it is important to note that many loan documents contain catch-up provisions that require payments in advance of the general structure of the note's terms in order to avoid the AHYDO rules.
163(e)(5)(F)(i), the AHYDO rules are suspended where a note that is not an AHYDO is exchanged for a note that would be an AHYDO if not for the temporary suspension.
Because the new interest rate exceeds the May 2010 AFR of 4.47% by more than five percentage points, the note would be an AHYDO, with interest recharacterized as nondeductible dividend equivalent, if not for the temporary suspension under Sec.
Under this set of facts, the increased deemed issue price of $50 million is used to determine whether the note is an AHYDO under the revised terms.
The IRS recently provided guidance on AHYDO in Rev.
The new guidance provides more certainty with respect to certain potential AHYDO tax issues that may be affected by the issuance of specific debt obligations.
163(e)(5) (i.e., the AHYDO rules could be applicable).
The use of a less-than-optimal accrual period may cause a DI to have significant OID and, thus, inadvertently trigger the AHYDO provisions.
1.163-7(d) provides that the accrual period for AHYDO purposes must be the same one used for OID accruals (the OID rules are generally contained in Secs.
The DI would meet the first three AHYDO tests, in that the issuer is a corporation, the term exceeds five years and the YTM exceeds the allowable amount.
Allocations: If a partnership note cannot be structured to avoid AHYDO characterization, the first task is to determine how much of the debt should be allocated to corporate versus noncorporate partners.
Similar to the partnership application of AHYDO, Sec.