straight debt
(5) Straight debt safe harbor (A) In general For purposes of subsection (b)(1)(D), straight debt shall not be treated as a second class of stock. (B) Straight debt defined For purposes of this paragraph, the term “straight debt” means any written unconditional promise to pay on demand or on a specified date a sum certain in money if— (i) the interest rate (and interest payment dates) are not contingent on profits, the borrower’s discretion, or similar factors, (ii) there is no convertibility (directly or indirectly) into stock, and (iii) the creditor is an individual (other than a nonresident alien), an estate, a trust described in paragraph (2), or a person which is actively and regularly engaged in the business of lending money. (C) Regulations The Secretary shall prescribe such regulations as may be necessary or appropriate to provide for the proper treatment of straight debt under this subchapter and for the coordination of such treatment with other provisions of this title.