Corporate Taxes Internal Revenue Service

News & Analysis as of

Global Tax News: US Treasury's proposed §385 regulations under extreme scrutiny on Capitol Hill, in corporate tax departments: top...

As part of its ongoing effort to try to curb inversion transactions, the Treasury Department has issued proposed regulations under section 385. Section 385(a) authorizes the Treasury Department to issue regulations that may...more

Proposed Regulations on Foreign-Owned U.S. Disregarded Entities

On May 10, 2016 the Internal Revenue Service (the “IRS”) published proposed regulations that, if finalized, will treat a domestic disregarded entity wholly owned (directly or indirectly) by a foreign person as a corporation...more

SALT Implications of Proposed Section 385 Debt/Equity Regulations

Determining the difference between debt and equity is a problem that has bedeviled taxpayers and tax administrators for decades. Taxpayers, recognizing that there are tax advantages to financing a corporation with debt (e.g.,...more

IRS Issues Proposed Regulations That Would Recast Certain Debt Instruments as Equity

On April 4, 2016, the IRS and U.S. Treasury Department, in connection with a package of anti-inversion regulations prompted by news of the recent spate of corporate inversions (particularly the $160 billion Pfizer-Allergan...more

Attention Taxpayers: New IRS Rules May Deem Debt to Be Stock

In April, the IRS proposed rules that would treat debt between related corporations as stock for U.S. tax purposes. These rules would apply to all corporations (including regular C corporations, S corporations, foreign...more

Form 5472 Reporting by Foreign Owned Disregarded Entities Established in the U.S. - Coming Soon!

Presently, a domestic single member LLC, and other similar single owner entities, absent a check-the-box election to the contrary, are disregarded for almost all U.S. tax purposes. Presently, a foreign owner of such...more

Proposed Section 385 Regulations May Dramatically Impact Portfolio Debt Planning

On April 4, 2016, the IRS and Treasury issued proposed regulations under Section 385 (the “Proposed Regulations“). The Proposed Regulations, which were thought to have been a response to post-inversion earnings stripping...more

The Legacy of Michigan Senator Levin and Offshore Taxation Issues

When Senator Levin, the Democrat from Michigan, announced his retirement from the Senate in 2014, you could hear a collective sigh of relief from the corporate business community. Senator Levin had dedicated himself to...more

New "Inversion" Proposed Regulations Inspired By The Pfizer/Allergan Deal May Impact Corporate Tax Planning Strategies

The Treasury Department has recently promulgated proposed regulations dealing with so-called inversion transactions. Inversion transactions are ones in which a U.S. corporation changes its domicile to a nation with a more...more

Recent Connecticut Tax Law Developments

Coming off what was a relatively quiet year in 2014, the year 2015 was a tumultuous year for Connecticut tax law changes. The changes enacted during 2015 will impact virtually all taxpayers in the state (both individuals and...more

Section 385 Proposed Regulations

On April 4, 2016, Treasury and the IRS proposed sweeping regulations under § 385 of the Code. Issued the same day as the anti-inversion temporary regulations, the proposed § 385 rules would go much farther than merely...more

IRS Rules Could Treat Related Party Debt as Stock

Multinational groups can strip U.S. earnings away from U.S. taxation by having a domestic corporation issue debt and pay earnings out to foreign affiliates as deductible interest. This strategy could be used after an...more

Is it Debt or is it Not? Proposed Treasury Regulations Would Significantly Change Debt vs. Equity Analysis

Earlier this month, the IRS and Treasury Department proposed new Treasury regulations (the “Proposed Regulations”) under Section 385 of the Internal Revenue Code. The Proposed Regulations would significantly modify the tax...more

Is Your Corporation “Zeroing Out” Income at End of Year Through Bonuses? Watch Out!

For the last few years the IRS has warned taxpayers that it would look closely at year-end bonuses that resulted in “zeroing out” taxable income of a corporation by deducting the bonuses as salary rather than a payment of...more

Treasury Issues Stringent Inversion Regulations, Proposes Far-Reaching Related-Party Debt Rules

New regulations expand prior guidance reducing tax benefits of inversions. Proposed debt-equity rules will impact even routine intercompany transactions. On April 4, 2016, the US Department of the Treasury (Treasury) and...more

Proposed IRS and Treasury Regulations Have Broad Implications for Intercompany Debt Structures

On April 4, 2016, the U.S. Treasury Department and the Internal Revenue Service (“IRS”) issued proposed regulations ostensibly aimed at curbing inversions and earnings stripping, by companies located in the U.S. with overseas...more

Latest Treasury Action on Inversions Upends Pending Transactions and Surprises Many for Its Broad Scope and Use of Questionable...

On April 4, 2016, the Treasury Department and the Internal Revenue Service issued a sweeping package of new regulations intended to curtail inversion transactions (the “Regulations”). Many features of the Regulations had...more

International Tax Advisory: New Temporary Regulations Continue the Fight Against Inversions

On April 4, the Treasury released temporary regulations to attack (and prevent) inversions. Aimed at transactions designed to avoid the purposes of Sections 7874 and 367 and certain post-inversion avoidance transactions, the...more

Treasury Department Issues Temporary and Proposed Regulations to Curb Inversions and Earnings Stripping

On April 4, 2016, the Internal Revenue Service and the Treasury Department issued temporary and proposed regulations formalizing rules contained in Notices 2014-52 and 2015-79 limiting corporate tax inversions, as well as...more

New Guidance Rewrites Debt/Equity Rules and Further Limits Inversions

The IRS and Treasury Department released a package of temporary and proposed regulations on April 4, 2016 ostensibly aimed at further curbing corporate “inversion” transactions. The regulations cover a wide range of tax...more

New Regulations Issued to Expand the Reach of Anti-Inversion Rules

Code Section 7874 seeks to remove the U.S. tax benefits that can apply by inserting a non-U.S. holding company into the ownership structure of businesses formerly conducted through a U.S. holding company. This is a big...more

Proposed Regulations Would Fundamentally Change Treatment of Intra-Group Debt Transactions

On April 4, 2016, the U.S. Department of the Treasury and Internal Revenue Service (IRS) issued two sets of regulations, temporary regulations addressing “inversion” transactions and proposed regulations regarding the...more

The IRS Is Looking to Recharacterize Related Party Debt as Equity Simply for Failing to Meet on a Timely Basis New Contemporaneous...

In the early 1980's, the IRS issued regulations on the question of when loans to corporations would be recharacterized under Code Section 385 as equity. The conversion of purported debt can have significant adverse income tax...more

New Temporary Inversion Regulations

The IRS once again is targeting inversions, and this time there have been immediate tangible results. The IRS issued temporary regulations on Monday targeting inversion transactions. An inversion occurs where a foreign...more

U.S. Tax Considerations for Corporate Dealings in Cuba

On March 1, 2016, the Internal Revenue Service (IRS) issued Revenue Ruling 2016-8, which removed Cuba from a blacklist of foreign countries that are denied certain favorable tax rules under the Internal Revenue Code (IRC)....more

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