Treasury and the IRS released final regulations on July 11, that address inversion transactions under Section 7874 and several other Code provisions, finalizing temporary and proposed regulations issued in 2016. The final regulations generally implement all the 2016 temporary and proposed regulations without fundamental changes, but make clarifications and certain other technical changes in response to comments.
Taxpayers that have undertaken, or are currently contemplating, an inversion transaction should consider the potential impact of the new rules in the final regulations, especially with respect to post-inversion transactions with related parties. Other taxpayers, particularly those in structures with foreign parents, should also be mindful of the new (and retroactively effective) rules for Section 304 transactions, especially as they might impact transactions undertaken in the past 18 months.
Partner, Washington National Tax Services ITS Leader, PwC US