IRS Unveils Guidance on Section 367 Domestic-to-Foreign Transfers

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The Internal Revenue Service unveils a comprehensive package of guidance on the treatment of domestic transfers to foreign corporations in reorganizations under tax code Section 367, adding more detail on when taxpayers will qualify for an “elective exception” to tax on such transfers. In a set of final and temporary rules (T.D. 9614), the agency sets out guidance on transfers of property by domestic corporations to foreign corporations in nonrecognition exchanges or distributions of stock of foreign companies by a domestic corporation in tax-free transactions. In another set of final and temporary regulations (T.D. 9615), IRS says it is cracking down on new versions of what it called tax-free corporate repatriation transactions that it had originally hoped to stop under Notice 2008-10.