Today, Treasury and the IRS released final regulations under Section 987 and submitted them for publication in the Federal Register on May 13, 2019. These regulations provide limited guidance with respect to finalizing parts of the temporary regulations under Section 987, which were issued on December 7, 2016. Of particular interest, the final regulations are narrow in scope and address three particular issues: (i) combinations and separations of Section 987 qualified business units (QBUs), (ii) withdrawal of the liquidation value percentage methodology set forth in Treas. Reg. sec. 1.987-7T, addressing allocation of assets and liabilities in the context of aggregate partnerships, and (iii) finalization of Treas. Reg. sec. 1.987-12T, anti-abuse rules. These final regulations do not amend and do not finalize other sections of the temporary Section 987 regulations.
The regulations contain 18 pages of preamble language and 26 pages of regulatory text. The final regulations are effective on the date of publication in the Federal Register but the applicability dates differ.
PwC will publish a detailed analysis of the final regulations within the coming days.
Principal, International Tax Services, PwC US