Intercompany Debt: A Handshake Isn’t Enough

For U.S. tax purposes, a company must comply with certain tax and transfer pricing considerations when structuring intercompany debt transactions. Considerations include application of the arm's length standards of Treas. Reg. § 1.482-2(a), documentation requirements of regulations under I.R.C. § 385, and the characterization of the instrument as either debt or equity under case law, rulings, and I.R.C. § 385.  

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• Intercompany Promissory Note (Credit Agreement)
  Use this template intercompany promissory note as an exhibit to a credit agreement in a typical syndicated loan transaction. An intercompany promissory note is an instrument that evidences a loan between affiliated entities within a corporate group. Intercompany loans are a common means of moving funds from one area of a business to another but are not always formally documented. 

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