U.S. tax practitioners were the first to use hybrid instruments
and entities in international tax planning. It is therefore neither
surprising nor inappropriate that the United States was the first
country (in 1997) to enact an anti-hybrid rule (in section 894(c)
of the U.S. Internal Revenue Code [Code]), and 20 years later (in
2017) among the first to adopt (in the Tax Cuts and Jobs Act of
2017 [TCJA]) recommendations for enhanced anti-hybrid rules
published as part of the base erosion and profit shifting project
spearheaded by the Organisation for Economic Co-operation and
Development (OECD).
On April 7, 2020, the IRS released final and proposed
regulations (Final Regulations and Proposed Regulations,
respectively, and collectively New Regulations) under the
TCJA's anti-hybrid provisions. The Final Regulations finalize
regulations that the IRS issued in proposed form on December 28,
2018 (Prior Regulations).
