Government issues temporary and final inversion regulations

Tax Hot Topics: Government issues temporary and final inversion regulationsThe IRS and Treasury recently released final and temporary regulations (TD 9812) under Section 7874. The regulations are generally intended to address transactions structured to avoid the intent of Section 7874. The regulations identify certain stock of a foreign corporation that is disregarded in calculating ownership of the foreign corporation for purposes of determining whether it is a surrogate foreign corporation. These regulations also provide guidance on the effect of transfers of stock of a foreign corporation after the foreign corporation has acquired substantially all the properties of a domestic corporation or of a trade or business of a domestic partnership.  

The regulations are generally effective Jan. 18, 2017. However, the regulations have varying applicability dates.  For example, the regulations apply to domestic entity acquisitions that are completed on or after Sept. 17, 2009, to the extent described in Notice 2009-78. Certain aspects of the regulations also generally apply to domestic entity acquisitions completed on or after Jan. 16, 2014, to the extent the regulations adopt proposed rules issued in 2014.

Contact David Sites
Partner, Washington National Tax Office
+1 202 861 4104

Cory Perry
Experienced Manager, Washington National Tax Office
+1 202 521 1509

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