Close
Close

IRS finalizes inversion regulations

RFP
Tax Hot Topics newsletterOn July 11, the IRS and Treasury released final regulations (T.D. 9834) under section 7874. The regulations are generally intended to address transactions structured to avoid the intent of section 7874. The final regulations largely adopt temporary and proposed regulations issued in 2016. The temporary regulations were set to expire on April 4, 2019.

The final regulations make minor technical changes and calcifications to the previous proposed and temporary regulations. These changes
impact a number of rules, including the “Acquisitions of Multiple Domestic Entities Rule,” the “Passive Asset Rule,” the “Third-country Rule, among others. The IRS and Treasury also finalized temporary regulations under sections 304, 367, 956 and 7701(l), which seek to reduce the tax benefit of certain post-inversion tax avoidance transactions.

The regulations are effective on varying dates including retroactively in many circumstances. The effective dates are largely based on applicability dates included in previously issued proposed and temporary regulations, or dates included in notices announcing certain rules. Taxpayers that have entered into, or those that plan to enter into, an inversion transaction should carefully consider the potential impact of these new rules.

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

David Zaiken
Managing Director, Washington National Tax Office
T +1 202 521 1543

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

Tax professional standards statement
This content supports Grant Thornton LLP’s marketing of professional services and is not written tax advice directed at the particular facts and circumstances of any person. If you are interested in the topics presented herein, we encourage you to contact us or an independent tax professional to discuss their potential application to your particular situation. Nothing herein shall be construed as imposing a limitation on any person from disclosing the tax treatment or tax structure of any matter addressed herein. To the extent this content may be considered to contain written tax advice, any written advice contained in, forwarded with or attached to this content is not intended by Grant Thornton LLP to be used, and cannot be used, by any person for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.

The information contained herein is general in nature and is based on authorities that are subject to change. It is not, and should not be construed as, accounting, legal or tax advice provided by Grant Thornton LLP to the reader. This material may not be applicable to, or suitable for, the reader’s specific circumstances or needs and may require consideration of tax and nontax factors not described herein. Contact Grant Thornton LLP or other tax professionals prior to taking any action based upon this information. Changes in tax laws or other factors could affect, on a prospective or retroactive basis, the information contained herein; Grant Thornton LLP assumes no obligation to inform the reader of any such changes. All references to “Section,” “Sec.,” or “§” refer to the Internal Revenue Code of 1986, as amended.