The IRS has concluded in field attorney advice (FAA 20124601F)
that two corporations formed immediately prior to an asset sale
were ignored for U.S. federal income tax purposes.
The field attorney advice addressed a corporation (the taxpayer)
that owned a controlled foreign corporation (CFC) and a subsidiary
(Sub 1). The taxpayer entered into an agreement to sell most of its
property to an unrelated corporation (the buyer), including a
certain property held by CFC (Property A). The taxpayer desired to
receive proceeds from Property A outside the CFC's country, and
the buyer desired to hold such property in a corporation formed in
a different country than CFC's.
Prior to such asset sale, the taxpayer restructured as follows
CFC formed a new corporation (Newco 1) by contributing Property
A in exchange for Newco 1 shares.
The taxpayer's owner (the owner) formed a new corporation
(Newco 2) on behalf of the taxpayer and transferred all of the
stock of Newco 2 to Sub 1 in exchange for consideration.
CFC then transferred the stock of Newco 1 to Newco 2 in
exchange for the retirement of certain intercompany debt owed by
CFC that was transferred to Newco 1 by the taxpayer.
After the restructuring, Sub 1 sold its Newco 2 stock to the
The IRS concluded that CFC sold Property A to the buyer in
substance and disregarded Newco 2 and Newco 1, citing Rev. Rul.
70-140 and Comm'r v. Court Holding Company (324 U.S.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
21 Sep 2016, Webinar, Washington, DC, United States
Learn about tax developments and significant tax issues that can affect your financial statements, including accounting for income and non-income taxes. We will focus on the financial reporting implications of these developments.
4 Oct 2016, Webinar, Washington, DC, United States
This webcast will explore how your company’s enormous stockpile of data, both publically available and proprietary, might be used in high-value ways, not only for future risk planning purposes but also to help unlock answers to some of your key business issues and challenges.
Describe how large and midsize life sciences leaders are optimizing their approach by strategically using data analytics for competitive advantage to protect their reputations and maintain a solid standing with health authorities and the OIG
Demonstrate how to build a global lens into analytics by combining existing internal data sources (compliance and others) with external data sources (structured and unstructured data)
The Protecting Americans from Tax Hikes Act of 2015 (PATH Act) accelerated the due date for filing Form W-2, Wage and Tax Statement and Form W-3, Transmittal of Wage and Tax Statements, and any returns or statements required by the IRS to report nonemployee compensation to January 31.
Whether you're still building your business or you're firmly established and looking ahead to the next phase, it's a good idea to be informed about retirement so you can best prepare. - See more at: http://www.gppcpa.com/blog/2016/08/02/2161/#sthash.bjw2IRWS.dpuf
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).