Extract to table

The proper characterization and amortization of each category of costs must be determined in order to optimize Stonefield's tax position while ensuring compliance with applicable provisions of the Code and Treasury Regulations

Section 1273(c)(2) provides that when a debt instrument is issued as part of an "investment unit" — that is, in conjunction with an option, warrant, or other right to acquire stock of the issuer or a related party — the issue price of the investment unit must be allocated between the debt instrument and the other property (here, the Warrants) based on their relative fair market values

01 per share, which is effectively zero in economic terms, does not alter this characterization; the Warrants are nonetheless equity-linked instruments that must be separately valued and allocated

• Ridgeline must include the OID in gross income as ordinary interest income, regardless of whether any cash payment is received

However, ATI for Section 163(j) purposes must be computed from taxable income, not financial reporting EBITDA