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US Treasury and the IRS recently 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.

The Final Regulations provide guidance related to the anti-hybrid provisions of Section 267A and 245A(e). They retain the overall architecture of the 2018 Proposed Regulations but make a number of changes that either clarify, expand, or narrow the reach of the 2018 Proposed Regulations and, thus, may impact how taxpayers are affected by these rules.

In addition, the new 2020 Proposed Section 881 Regulations, if finalized as proposed, will expand the reach of the anti-conduit regulations to impact financing arrangements that currently may not be in the scope of the current rules. Finally, the 2020 Proposed Section 951A Regulations provide an additional rule with respect to deductions related to prepayments made to a fiscal year CFC during the disqualified period.

Final Section 267A regulations:

Additional analysis