Preliminary highlights from the final anti-hybrid regulations and related proposed regulations

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April 2020

Overview

Treasury and the IRS on April 7, 2020 published regulations that finalize 2018 proposed regulations addressing anti-hybrid rules under Sections 245A(e), 267A, and 1503(d).  On the same date, Treasury and the IRS issued additional proposed regulations under Sections 245A(e), 881 (with respect to the anti-conduit regulations), and 951A.

PwC is in the process of reviewing the final regulations in detail; some of the key highlights we have identified thus far are set forth below. An in-depth Insight on the final regulations will be published in the coming days. In addition, we will discuss the anti-hybrid guidance on a PwC webcast scheduled for April 17 at 2:00 pm ET.

The takeaway

The final regulations provide guidance related to the anti-hybrid provisions of Sections 245A(e) and 267A.  They retain the overall architecture of the proposed regulations but make a number of changes that either clarify, expand, or narrow the reach of the proposed regulations and thus may impact how taxpayers are affected by these rules.  In addition, the new proposed regulations will expand the reach of the anti-conduit regulations to impact financing arrangements that currently may not be in the scope of the regulations.  Taxpayers should evaluate the impact of the final and proposed regulations on their businesses.

The above-mentioned highlights are not an exhaustive list of the provisions in the new final and proposed regulations. We expect to publish an in-depth Insight in the coming days.

Contact us

Doug McHoney

International Tax Services Leader, PwC US

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