Asset-for-Stock Rules for Partners Will Lessen ‘Zone of Discomfort'

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June 2 — Final regulations overseeing transactions in which partners exchange assets for stock without triggering taxable gains will be narrower in scope, recognizing that legitimate deals could be affected by overly broad language in the proposed rules, a Treasury Department official said.

“The objective around the proposed regulations was to put a zone of discomfort around these types of transactions,” Craig Gerson, an attorney-adviser in the Office of Tax Legislative Counsel, said June 2 at a D.C. Bar Taxation Section forum. “If you're not within the purpose of these provisions, you shouldn't be disadvantaged by them.”

Treasury officials have publicly stated in recent months that the rules are close to completion, more than 23 years after the proposed regulations were released. The final rules, which are expected to be issued “soon” under tax code Section 337(d), are intended to apply to large, well-advised corporations and will include provisions for tiered partnerships, Gerson said (47 DTR G-5, 3/11/15).