On April 4, 2016, the US Department of the Treasury and the Internal Revenue Service proposed regulations under section 385 of the Internal Revenue Code that would recharacterize certain related-party debt instruments, in whole or in part, as equity. Although the Proposed Regulations were motivated to curb the benefits of post-inversion earnings-stripping and repatriation transactions where no new capital is invested in the US borrower, the Proposed Regulations, if finalized in their present form, would impact far more than these transactions. The Proposed Regulations would affect routine financing transactions entered into by multinational corporate groups and portfolio companies owned by private equity funds, even in instances in which the issuer is not a US corporation and the debt instrument is not issued in connection with an inversion transaction. The broad scope of the Proposed Regulations also would impact common decisions primarily motivated by non-tax concerns, such as which company in an expanded group will borrow from third parties.