On April 4, 2016, without warning, the US Department of the Treasury proposed a new set of comprehensive regulations under section 385. There had been no advance indication that regulations were even under consideration. Although the Treasury indicated that the proposed regulations were issued in the context of addressing corporate inversions, their application went well beyond the inversion space and they apply to inter-corporate debt regardless of whether it occurs in an international context. The following is a discussion of the state and local tax consequences of the proposed regulations; for a detailed discussion of the proposed regulations themselves, see this previous article.
SALT Implications of Proposed Section 385 Debt/Equity Regulations
By McDermott Will & Emery on May 18, 2016
Posted In Audits, Federal Tax, Income Tax, Local Tax, Nationwide Importance, New York