US IRS issues final tax regulations on disregarded stock in inversions

The US IRS has published final and temporary (TD 9812) and proposed (REG-135734-14) tax regulations under section 7874 designed to fight tax avoidance associated with the inversion of a US entity into a foreign corporation.

The final regulations, to be included in the January 18 edition of the Federal Register, identify stock of a foreign corporation which should be disregarded for purposes of calculating ownership tests that determine if a corporation is considered a surrogate foreign corporation.

The regulations also provide guidance on the effect of transfers of stock of a foreign corporation after the foreign corporation has acquired substantially all of the properties of a domestic corporation or of a trade or business of a domestic partnership.

See:

• Final and temporary regulations

• Proposed regulations