The U.S. Treasury Department and IRS today released for publication in the Federal Register proposed regulations (REG-135671-17) that would amend final regulations (June 2018) that prevent a corporate partner from avoiding corporate-level gain through transactions with a partnership involving equity interests of the partner or certain related entities.
The preamble to today’s proposed regulations [PDF 436 KB] states that there are “substantive modifications” to the June 2018 final regulations relating to the definition of “Stock of the Corporate Partner.” Read about the June 2018 final regulations in TaxNewsFlash.
The preamble to the proposed regulations indicates that the proposed amendments are generally intended to prevent taxpayers from structuring partnership transactions that allow corporations to eliminate gain on appreciated assets or otherwise contravene the purposes of section 337(d). The proposed regulations are proposed to be effective as of the date of publication as final regulations. Taxpayers, however, may rely on the proposed regulations for transactions occurring on or after June 12, 2015, and prior to the date of final regulations, provided that the taxpayer consistently applies all of the proposed regulations to such transactions.
The proposed regulations contain four specific proposed amendments:
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