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Taxand USA provides a summary of how the final Section 385 regulations may generally impact US and non-US multinationals.
On the evening of October 13, 2016, the United States Treasury Department and IRS released final and temporary Section 385 Regulations (Final Regulations) regarding purported related-party debt instruments.
These Final Regulations revise the highly controversial proposed regulations issued in April 2016 to address a number of concerns identified during the public comment period.
A&M Taxand spoke at the Tax Executive Institute’s annual conference to share their insights and confirm their thinking on key portions of the regulations with other tax practitioners as well as many Treasury Department officials.
Discover more: Intra-group cross-border interest rules: Final and temporary Section 385 regulations are here!
Discover more: Section 385 Regulations – is your business prepared?
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The extensive and highly complicated Final Regulations can present a host of unintended and harmful consequences for the ill-prepared taxpayer. With the harsh penalty of a transaction intended to be debt being automatically recast as equity, all taxpayers should analyse these rules when entering into intercompany debt instruments.