On October 13, 2016, the US Treasury Department
("Treasury") and the Internal Revenue Service
("IRS") issued final and temporary regulations (the
"Final Regulations") under section 385 of the Internal
Revenue Code as the follow-up to the proposed regulations (the
"Proposed Regulations") issued on April 4. The Proposed
Regulations had the potential to produce far-reaching effects on US
and foreign companies, overturning the long-standing treatment of
certain intercompany debt arrangements and subjecting them to the
risk of an equity recharacterization for US tax purposes.
These Final Regulations generally maintain the overall theme of
the Proposed Regulations. However, the Final Regulations provide
some welcome limitations to the scope of those rules as well as
certain exceptions and clarifications that mitigate some of the
concerns identified with the Proposed Regulations.
This legal update provides a brief summary of the most
significant changes included in the Final Regulations.
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entities in Asia; and Tauil & Chequer Advogados, a Brazilian
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Mayer Brown Practices in their respective
Mayer Brown article provides information and comments on legal
issues and developments of interest. The foregoing is not a
comprehensive treatment of the subject matter covered and is not
intended to provide legal advice. Readers should seek specific
legal advice before taking any action with respect to the matters
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The election of President Donald J. Trump, combined with Republican control of Congress, makes fundamental U.S. federal income tax reform more likely than at any time since the enactment of the Tax Reform Act of 1986.
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