Until the issuance of the Proposed Regulations described below, under Section 956 of the Internal Revenue Code of 1986 (IRC) and Treasury Regulations thereunder, deemed dividends were potentially created when a U.S. borrower pledged as security two-thirds or more of the voting stock in a foreign subsidiary considered to be a "controlled foreign corporation" (CFC) for U.S. tax purposes, or if the CFC guaranteed or pledged its assets as security for the U.S. parent's debt.