The IRS and Treasury on April 4 announced their latest action to
limit inversion transactions and address earnings stripping. As
part of this announcement, the government issued final and
temporary (T.D. 9761), as well as proposed (REG-135734-14), regulations that address
transactions that are structured to avoid the purposes of Sections
7874 and 367. The text of the temporary regulations also serves as
the text of concurrently issued proposed regulations.
Packaged together with the inversion regulations, proposed
regulations (REG-108060-15) authorize the IRS to, among
other things, treat certain related-party interests in a
corporation as part indebtedness and part stock for U.S. federal
tax purposes, and establish threshold documentation requirements
that must be satisfied for certain related-party interests in a
corporation to be treated as indebtedness.
