Debt Instrument

Debt Instrument

Debt Instrument means:
a written promise to repay a debt, such as a bill, bond, banker's acceptance, note, certificate of deposit, or commercial paper. A formal debt instrument is critical for obtaining a nonbusiness bad debt deduction (that is, a short-term capital loss) and for overcoming an U.S. Internal Revenue Service (IRS) agent's position that debt is in reality equity (i.e., interest expense deduction reclassified as a disguised dividend). See also nonbusiness bad debt; thin capitalization. Former IRC (check if this IRC provision is current here) § 1275(a)(1).

U.S. and other Developed Countries International Tax Meaning

A written promise to repay a debt, such as a bill, bond, banker's acceptance, note, certificate of deposit, or commercial paper.

See Dividend in the American Legal Encyclopedia and Dividend in the World Legal Encyclopedia.


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