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October 11, 2024 Report on recent US international tax developments - 11 October 2024 Treasury and the IRS on 9 October released final regulations (TD 9994) under IRC Section 367(d) concerning the repatriation of intangible property by a foreign corporation to a qualified domestic person. The final regulations adopt the proposed regulations from May 2023 with some limited modifications. The final regulations include the largely taxpayer-favorable rule in the proposed regulations that removes the uncertainty as to the consequences of repatriating previously "outbounded IP." The final regulations are effective 10 October 2024. A Tax Alert is forthcoming. Treasury and IRS officials are compiling technical corrections to the voluminous corporate alternative minimum tax (CAMT) proposed regulations released in early September, according to government officials this week. Treasury and the IRS have identified errors in the CAMT proposed rules, including substantive issues that will require clarification. There is no specific timeline, but an official noted that technical corrections generally soon follow the original guidance. One expected correction that has already been noted is Example 3 in Proposed Reg. Section 1.56A-19(d)(6)(iii), which the official said provides an improper application of IRC Section 361(b)(3). A similar example in Notice 2023-7 — the first released guidance on the CAMT — provides the correct answer, the official said. An IRS official this week was quoted as saying the final dual consolidated loss (DCL) regulations will clarify the scope of the proposed regulations' anti-avoidance rule. According to the official, the final DCL anti-avoidance rule will make clear that it does not apply to all restructurings involving disregarded payments aimed at eliminating DCLs, but rather target planning that is meant to get around the DCL rules for unintended benefits. The IRS published proposed regulations (REG-105128-23) in August 2024 that address the interaction of the DCL rules with the BEPS Pillar Two Global Anti-Base Erosion Model Rules. They also make several other important changes to the current DCL rules. The OECD on 7 October published a working paper titled "Tax arbitrage through closely held businesses." The paper reviews arbitrage incentives and behaviors in OECD countries.
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