In This Issue:

- Distinguishing Between Captive Insurance and Related Party Derivatives: Chief Counsel Advice Memorandum 201511021

- Achieving Tax-Free ‘Rollover’ Treatment for Certain Shareholders in Acquisition of Publicly Traded Target Company

- German Real Estate Transfer Tax: A Trap for the Unwary Multinational

- New IRS Rulings Should Provide Greater Certainty for Corporate Restructurings

- Excerpt from Distinguishing Between Captive Insurance and Related Party Derivatives: Chief Counsel Advice Memorandum 201511021:

Overview -

In Chief Counsel Advice (CCA) memorandum 201511021, the Internal Revenue Service (IRS) considered whether a contractual arrangement transferring foreign currency (FX) risk to a captive insurance company resulted in insurance for federal income tax purposes. After considering the tax definition of insurance, the IRS concluded that the arrangement should be taxed as a foreign currency derivative—rather than insurance—based largely on its view that the FX risk at issue did not qualify as an “insurance risk.”

The FX Arrangement -

The Taxpayer Group in the CCA is described as a group of related entities engaged in the design, manufacture, etc., of products and services in the environmental and life sciences sectors. The Taxpayer Group includes a regulated state law captive insurance company (“Captive”) that provides coverage to the Taxpayer Group for a variety of risks.