On August 6, 2015, the IRS issued Notice 2015-54, which states that the IRS and Treasury intend to issue regulations under section 721(c) of the Internal Revenue Code to ensure that, when a U.S. person transfers certain property to a partnership that has foreign partner related to the transferor, income or gain attributable to the property will be taken into account by the transferor either immediately or periodically. The rules will apply whether the partnership is domestic or foreign. Notice 2015-54 is significant because many transactions involving the outbound transfer of property use a partnership rather than a corporation structure to avoid the application of section 367 of the Internal Revenue Code, which generally prevents the corporate nonrecognition provisions from applying to transfers to foreign corporations.

Originally published in Tax Management International Journal - November 13, 2015.