IRS Seeks to Tighten Rules on ‘Killer B’ Cross-Border Reorganizations

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The Internal Revenue Service is taking more action to curb tax-free repatriation of earnings through cross-border triangular reorganizations known as “Killer Bs” under tax code Section 367.
In Notice 2014-32, issued April 25, the agency said it is cracking down on transactions happening in the wake of final rules (T.D. 9526) released in 2011 (96 DTR G-2, 5/18/11).
In the notice, the IRS said it will broadly interpret the anti-abuse rule under Section 367.
The government said Section 367(b) income should include only dividend income and gain subject to U.S. tax or dividend income and gain that give rise to an income inclusion under Section 951(a)(1)(A) that is subject to U.S. tax.