Today, the IRS proposed regulations (REG-108060-15) under section 385 addressing earnings stripping. These proposed regulations aim to prevent the creation of large interest deductions without any corresponding investment within the United States.  Such related-party debt would be treated as stock under the proposed regulations. Under the regulations, the IRS on audit would be allowed to classify a debt instrument as part debt and part stock.  The regulations also include new documentation requirements for related party indebtedness