The Appeals Court of Massachusetts (“Court”) recently upheld the Massachusetts Appellate Tax Board’s (“Board”) decision that certain financing transactions between affiliates resulted in equity, as opposed to debt. Nat’l Grid Holdings, Inc. v. Com’r of Rev., Mass. App. Ct., No. 14-P-1662 (6/8/16). In a companion case, the Court further held that a closing agreement with the Internal Revenue Service (“IRS”) that permitted some of the taxpayer’s interest deductions claimed in connection with the aforementioned intercompany financing was not binding on the Massachusetts Department of Revenue (“Department”) because the closing agreement “did not establish that the [transaction] qualified as interest.” Nat’l Grid USA Service Co., Inc. v. Comm’r of Rev., 89 Mass. App. Ct. 522 (6/8/16). These cases provide additional clarity in determining whether debt will be treated as equity in Massachusetts and also provide insight into Massachusetts’s position surrounding the acceptance of IRS closing agreements.