IRS Makes ‘Big Shift' in Rules on Earnings Allocation in Reorganizations

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Nov. 7 — Joint final IRS rules on the distribution of tax attributes and allocation of earnings and profits in reorganizations represent a big shift—both adding certainty and taking away some of the choices taxpayers previously had in these transactions, practitioners told Bloomberg BNA.
“The final regulations reflect a significant change in the long-standing rules governing the location of tax attributes following a reorganization,” Brian Reed, a transaction tax specialist in EY LLP's National Tax Group, said Nov. 7, the date the rules were released.
In issuing the guidance (T.D. 9700, RINs 1545-BK73; 1545-BL80)) the Internal Revenue Service finalized two separate sets of proposed rules in one combined regulation.