The app calculates the standard de minimis OID threshold for a loan or note with customary terms that pays regular cash interest and has fixed (or no) amortization on a quarterly basis. An incremental loan or tack-on note that is issued with less than de minimis OID and with the same terms as the existing debt is generally considered tax fungible with the outstanding debt.
The Latham OID Threshold Calculator® is available as a free download on the iTunes App Store and Google Play. The app can be used on iPhone, iPod and iPad, as well as Android devices.
A higher OID than calculated under this app may be permissible in certain situations. For more information on the Internal Revenue Service (IRS)’s final regulations that facilitate issuing fungible tack-on debt instruments, please see Latham’s Client Alert and Tax Fungibility In Tack-On Offerings Flow Chart.