News & Analysis as of

Dividends Controlled Foreign Corporations

Blank Rome LLP

Departments Don’t Always Know Best

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Departments of Revenue are notorious for treating their guidance as the final and absolute word on an issue. However, that doesn’t mean that they are always right. The recent decision of the Oregon Tax Court in Microsoft...more

Freeman Law

Tax Court Addresses a Difference in Dates in the TCJA

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In Varian Medical Systems, Inc. v. Commissioner, the Tax Court addressed a seeming oversight in the Tax Cuts and Jobs Act of 2017 (the “TCJA”) involving the effective dates for amendments to section 78 and the enactment of...more

Bracewell LLP

An Imperfect Match: Aligning the Deemed Dividend Rule with the Post-Tax Reform DRD

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Eighteen months after the passage of the Tax Cuts and Jobs Act (TCJA or the Act), tax practitioners and taxpayers alike still are looking to Treasury for guidance to interpret and fill in gaps in the new tax laws. The hasty...more

Hogan Lovells

Upstream guarantees and security by foreign subsidiaries of a U.S. corporate borrower may now be available without adverse U.S....

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Tax structuring under the previous regime - Prior to the issuance of the final regulations described below, under Section 956 of the Internal Revenue Code of 1986 and its related Treasury Regulations, for U.S. tax...more

Husch Blackwell LLP

Final IRS Regulations Modify The Deemed Dividend Rule

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Key Points- Controlled foreign corporations may now provide credit support for U.S. corporate parents without adverse U.S. income tax consequences. Market practice will likely shift toward more controlled foreign...more

Latham & Watkins LLP

Final Section 956 Regulations Open the Door to Foreign Credit Support for US Corporate Borrowers

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Section 956 final regulations confirm those eligible for territorial dividend exemption can benefit from foreign guarantee and collateral support without incurring US tax. On May 23, 2019, the US Treasury and Internal...more

Eversheds Sutherland (US) LLP

Fine-tuning the course - Final Regulations enhance symmetry between taxation of actual dividends and section 956 inclusions

On May 23, 2019, the Department of the Treasury (Treasury) and the Internal Revenue Service (IRS) issued final regulations (TD 9859) (the Final Regulations) modifying the application of section 956 of the Internal Revenue...more

King & Spalding

Foreign Guarantees and Collateral in Play Following Finalization of Deemed Dividend Regulations

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On May 22, 2019 the Treasury Department and the Internal Revenue Service released regulations (the “Final Regulations”) finalizing and making certain technical changes to proposed regulations (the “Proposed Regulations”,...more

Troutman Pepper

Structuring U.S. Debt Facilities in Light of New IRS Rules

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Until recently, the structuring of debt facilities for U.S. borrowers with foreign subsidiaries has been largely driven by IRS interpretations of section 956 of the Internal Revenue Code, which gave rise to significant tax...more

Dechert LLP

IRS Releases Final Tax Regulations on Imputed Income from Subsidiaries and Other Controlled Foreign Corporations

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On March 18, 2019, the U.S. Department of the Treasury and the Internal Revenue Service issued final tax regulations for registered investment funds that are taxed as regulated investment companies (“RICs”) and that invest in...more

Proskauer - Tax Talks

Proposed Anti-Hybrid Regulations under Sections 267A, 245A, and 1503(d)

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On December 20, 2018, the Internal Revenue Service (the “IRS”) and the Department of the Treasury (the “Treasury”) released proposed “anti-hybrid” regulations (the “Proposed Regulations”) under sections 267A, 245A(e), and...more

Locke Lord LLP

IRS Issues Proposed Regulations under Section 956, Potentially Impacting Certain Multinational Debt Structures

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The IRS recently issued proposed regulations (REG-114540-18) under Section 956 of the Internal Revenue Code limiting the effect of such section, and potentially impacting relatively standard collateral package provisions for...more

Blank Rome LLP

Proposed Treasury Regulations Shift the Landscape in Debt Financings over Collateral of Foreign Subsidiary Stock

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Proposed Treasury Regulations have been published that will permit many U.S. corporate borrowers to provide a lender with a greater collateral package in respect of its foreign subsidiaries without an adverse tax consequence...more

Proskauer Rose LLP

Newly Proposed US Tax Regulations Open Possibility of Full Credit Support from Foreign Subsidiaries

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On October 31, 2018, the U.S. Treasury Department and the Internal Revenue Service (the "IRS") proposed new regulations under Section 956 of the Code (the "Proposed Regulations") that are likely to enhance the availability of...more

Kramer Levin Naftalis & Frankel LLP

IRS Paves the Way for Lenders to Obtain Guarantees and Collateral From (and 100% Stock Pledges of) Foreign Subsidiaries

Background On Oct. 31, 2018, the Internal Revenue Service issued proposed regulations under Section 956 of the Internal Revenue Code that will eliminate the adverse tax consequences when a U.S. parent corporation (i)...more

Proskauer - Tax Talks

Impact of Proposed Regulations under Section 956 on Lending Arrangements Involving U.S. Corporate Borrowers

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n October 31, 2018, the U.S. Treasury Department (“Treasury”) and the Internal Revenue Service (the “IRS”) proposed new regulations (the “Proposed Regulations”) that are likely to allow many controlled foreign corporations...more

Hogan Lovells

New IRS proposed regulations under Section 956 substantially reduce "deemed dividend" concerns with respect to pledges and...

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Until the issuance of the Proposed Regulations described below, under Section 956 of the Internal Revenue Code of 1986 (IRC) and Treasury Regulations thereunder, deemed dividends were potentially created when a U.S. borrower...more

Moore & Van Allen PLLC

Proposed Treasury Regulations Impact “Deemed Dividend” Tax Rules in Financing Transactions

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Following tax reform at the end of 2017, cash dividends from a foreign corporate subsidiary to a domestic corporate 10 percent shareholder are exempt from U.S. income tax because the shareholder is permitted a...more

Holland & Knight LLP

U.S. Corporate Financing Transactions Facilitated by IRS Proposed Regulation

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• The Internal Revenue Service has issued a proposed regulation that in many cases should eliminate the detrimental U.S. tax consequences to a U.S. corporation under Section 956 of the Internal Revenue Code when the...more

Eversheds Sutherland (US) LLP

Deemed participation better than no participation? Proposed regulations expand tax-free treatment to section 956 inclusions of...

On October 31, 2018, the Department of the Treasury (Treasury) and the Internal Revenue Service (IRS) issued proposed regulations (Proposed Regulations) modifying the application of section 956 of the Internal Revenue Code of...more

Latham & Watkins LLP

New Proposed Treasury Regulations May Eliminate Adverse Tax Consequences on Use of Foreign Credit Support for US Corporate...

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But Holding Period and Other Requirements Add Complexity - On October 31, 2018, the US Treasury and Internal Revenue Service issued proposed regulations (the Proposed Regulations) that would eliminate, in most...more

Katten Muchin Rosenman LLP

New Proposed Rules Limit the Negative Tax Consequences of Section 956 "Deemed Dividends" - Certain Foreign Guarantees and Stock...

On October 31, the Internal Revenue Service (IRS) released proposed regulations (the "Proposed Regulations") under Section 956 that could substantially increase the collateral packages made available by US corporate borrowers...more

Wilson Sonsini Goodrich & Rosati

IRS Issues Proposed Regulations Reducing Income Inclusions under Section 956 for Certain U.S. Corporations

On October 31, 2018, the U.S. Treasury Department and the Internal Revenue Service issued proposed regulations (the "Proposed Regulations") that would generally reduce the amount that a corporate U.S. shareholder is required...more

Holland & Knight LLP

U.S. Tax Reform: Impacts and Opportunities for Mexican Businesses, Part 1 - A General Overview on Issues That U.S. and Mexican...

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• The Tax Cuts and Jobs Act (Tax Act), signed into law on Dec. 22, 2017, made significant changes to the manner in which U.S. corporate and individual taxpayers are taxed on income from international operations. • The Tax...more

McDermott Will & Emery

The New Participation Exemption: An Opportunity to Convert Ordinary Dividends into Qualified Dividends

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The Tax Cuts and Jobs Act introduced an important new benefit to US corporations that own 10 percent or more of a foreign corporation. Specifically, a full participation exemption has been enacted that exempts certain foreign...more

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