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.
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The Treasury Department's Financial Crimes Enforcement Network (FinCEN) announced an automatic six-month extension for taxpayers required to file FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR).
One of the most publicized and long-awaited business provisions contained in the Omnibus Budget Reconciliation Act of 1993, P.L. 103-66, 107 Stat. 312 (1993) (the "1993 Act") was section 197 of the Internal Revenue Code of 1986 (the "Code"), which governs the tax treatment of acquired intangible assets. However, section 197 cannot be analyzed in isolation. Since it comes into play whenever there is an allocation of consideration to an amortizable section 197 intangible, a basic understanding of
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