On May 13, the IRS and Treasury issued final regulations under Section 385 of the tax code. The final regulations adopt 2016 temporary regulations without major changes. We discussed the temporary regulations generally here and their application to securitizations here. 

Although the final regulations do not make significant changes to the temporary regulations, the IRS previously announced that it intends to streamline the regulations in the future, including by removing the controversial "per se" funding rule. Under this rule, some putative debt instruments are characterized as equity if there is temporal proximity between their issuance and a distribution by the obligor to its equity holders.