Replay coming soon
KPMG TaxWatch Webcast
Final and Temporary Section 385 Regulations: Refined to Focus on Foreign Multinationals and Limit Application to U.S. Multinationals | October 21, 2016
The Treasury Department and IRS released on October 13, 2016, final and temporary section 385 regulations, addressing the treatment of related-party debt for U.S. tax purposes. These regulations had been proposed on April 4, 2016. The final rules offer significant relief for U.S. multinational groups, and offer some, but less significant, relief for foreign multinational groups.
KPMG's TaxNewsFlash alerts provide summaries of the latest tax regulatory and legislative developments being reported by KPMG International member firms around the world. Access TaxNewsFlash-United States.
On April 4, 2016, the Treasury Department and IRS released proposed regulations under section 385 addressing related-party debt. The regulations would significantly change the taxation of many common cash management transactions for U.S. and non-U.S. multinational groups. The regulations would 1) allow the IRS to bifurcate related-party debt into part equity and part debt; 2) create extensive documentation requirements necessary for related-party instruments to be respected as debt; and 3) recast debt as equity if it issued as part of a perceived base erosion transaction. Although proposed, if finalized the recast rules would phase in for debt issued on or after April 4, 2016. Upon finalization, the documentation requirements would need to be met as soon as 30 days after the issuance of related-party debt.
Companies Need to Prepare for Big Tax Changes, Forbes, read post by KPMG's Joe Pari and Ron Dabrowski | October 3, 2106
Read KPMG's Joe Pari on the U.S. Proposed Section 385 Regs | September 7, 2016
Joe answers questions on Thomson Reuters Tax & Accounting blog about reactions to the proposed regulations and how companies are preparing now for final regulations.
Read Many Business Leaders Believe Proposed Debt-Equity Rules Would Impact Companies More than BEPS, Says KPMG Survey. Joe Pari from KPMG's Washington National Tax practice noted, "Taxpayers need to be preparing now for the potential for the new rules to take effect, with significant impact expected possibly as early as a matter of months from now." (June 30, 2016 press release)
Read Conversations: Corwin Reflects on Debt-Euity Regs, His Time at IRS, an interview by Amy Elliott in Tax Notes, published by Tax Analysts on June 13, 2016.
Read Heading Down the Rabbit Hole: SALT Implications of the Proposed Section 385 Regulations, KPMG's TWIST-Q, June 2016
Disruptors in the Global Tax Landscape, the proposed section 385 regulations are among the top-of-mind challenges facing tax executives (Spring and summer 2016 survey results)