Recently issued final and temporary regulations under section 7874 make unexpected changes from prior regulations and will have a major impact on U.S. headquartered multinational enterprises' ability to become foreign corporations. Significantly, the temporary regulations remove a facts and circumstances test to determine that substantial business activities occur in the foreign company’s home country, which excuses a company from the provisions of section 7874, and which has been a feature of the regulations since they were first introduced in 2006. The new rules substitute a purely quantitative, 25 percent threshold for substantial business activities. Many practitioners question whether the new test could ever be met, given the wide geographic dispersion of multinational groups' employees, assets and income. The final regulations also now expressly bring downstream mergers under section 7874, and make changes to the way options are treated. This recorded webinar will explain the recently issued final and temporary regulations under section 7874.
This is a recorded webinar that originally ran live on July 11, 2012. As an eLearning course, you must pass the final exam of this course to receive CPE credit.
Course Level: Intermediate
Course Prerequisites: None
Delivery Method: Self-study
After completing this course, you will be able to:
• Understand the underlying policy concerns and what types of transactions are targeted;
• Understand the basic rules of section 7874 and how the temporary and final regulations impact U.S. companies; and
• Understand the impact of the new substantial business activities test.
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