Potentially adverse and unanticipated tax consequences under Section 956 of the Internal Revenue Code of 1986, as amended (the Code) are familiar concerns to U.S. borrowers and their counsel in cross-border financing transactions. Section 956 was enacted as an anti-abuse measure to tax a controlled foreign corporation’s (CFC) investment of earnings in U.S. property in the same manner as if it had distributed those earnings to the U.S. In the context of cross-border financings, guarantee and certain pledge arrangements by CFCs in support of a borrowing by a U.S. borrower would be considered as such an investment and therefore such arrangements have customarily been strictly limited to minimize the risk of adverse tax consequences.