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October 5, 2023

IRS releases proposed regulations on triangular reorganizations involving foreign corporations

The IRS has issued proposed regulations (REG-117614-14) addressing certain triangular reorganizations involving one or more foreign corporations. In a triangular reorganization that is the focus of these regulations, (1) a subsidiary purchases stock or securities of its parent corporation in exchange for property and (2) exchanges the purchased stock or securities for that of a target corporation. The proposed regulations, following up on 2014 and 2016 IRS Notices, expand the definition of "property" for this purpose, address how to treat the property used to acquire the parent stock or securities, the consequences of receiving the stock and how to treat certain subsequent inbound nonrecognition transactions following the reorganization. A Tax Alert is forthcoming.

Published by NTD’s Tax Technical Knowledge Services group; Andrea Ben-Yosef, legal editor