Treasury Targets Inversions and Related-Party Debt with Far-Reaching Regulations

Regulations will establish a sweeping framework to treat debt as equity and expand prior guidance reducing tax benefits of inversions.

April 27, 2016

Client Alert: Treasury Issues Stringent Inversion Regulations

On April 4, 2016, the US Department of the Treasury and the Internal Revenue Service issued new regulations aimed at curbing the cross-border corporate expatriation transactions commonly referred to as inversions and the associated tax advantages. The regulations elaborate on — and, in certain key respects, broaden — anti-inversion rules outlined in guidance issued over the last two years. Read the full Client Alert on the new inversion regulations

Client Alert: Treasury Targets Related-Party Debt with Proposed Regulations to Treat Debt as Equity

On April 4, 2016, Treasury and the IRS also announced proposed regulations under Internal Revenue Code Section 385 to address certain related-party debt transactions perceived as producing significant tax benefits but lacking meaningful non-tax significance. These transactions include “earnings stripping” techniques and repatriation planning that remove certain intragroup payments from the US federal income tax net. Although issued as part of a package related to inversion and post-inversion transactions, the Proposed Regulations extend beyond the inversion context, applying generally to taxpayers in both the cross-border and even the purely domestic context. Read the full Client Alert on the proposed related-party debt regulations

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