On December 16, 2016, the IRS issued a Revenue Procedure which provides that certain instruments issued by global systemically important banking organizations ("GSIBs") that provide total loss-absorbing capacity ("TLAC") will be treated by the IRS as indebtedness for federal income tax purposes. This IRS guidance follows on the heels of the Federal Reserve's issuance of its final TLAC regulations. In particular, the IRS guidance addresses internal TLAC that is issued to a non-U.S. GSIB by its U.S. intermediate holding company ("IHC"). Although TLAC is issued in the form of debt for state law purposes, tax commentators have questioned whether debt issued with certain features, such as a debt conversion feature, would qualify as indebtedness for federal income tax purposes. The Revenue Procedure provides that internal TLAC that is issued by an IHC of a foreign GSIB under the new rules will be treated by the IRS as indebtedness for federal tax purposes, to the extent the instruments have not been converted into equity. For additional information and discussion, please see our client alert, which may be found at the following link: https://media2.mofo.com/documents/161221-irs-guidance-tlac.pdf.