Notice 2012-39, recently issued by the IRS, provides guidance regarding the treatment under section 367(d) of transactions that, according to the IRS, raise "significant policy concerns" involving transfers of intangible property by a domestic corporation to a foreign corporation in certain corporate reorganizations.
More specifically, the Notice provides that in certain cross-border reorganizations, payments received by the US transferor will be treated as prepayments of the section 367(d) royalty, and thus currently includible in income, to the extent the payments are attributable to certain intangible property.
The IRS states in the Notice that it is targeting transactions designed to repatriate earnings without the "appropriate recognition of income."
The Notice is effective for transfers to foreign corporations occurring on or after July 13, 2012. Notably, there is no binding commitment or similar exception to this effective date. The Notice provides that no inference is intended as to the treatment of the transactions described in the Notice under current law, and that the IRS may challenge such transactions under applicable Code provisions or judicial doctrines.