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International Tax ADVISORY: Domestic Subsidiary Not Taxable on Complete Liquidation into Foreign Parent, Except for Certain Intangibles

January 15, 2014 By Edward Tanenbaum and Heather Ripley

This advisory discusses PLR 201348011, in which the IRS ruled that a U.S. subsidiary would not recognize gain or loss on the distribution of its assets to its foreign parent in complete liquidation—except for gain attributable to Section 936(h)(3) (B) intangibles. The letter ruling offers some positive insight on the IRS’ application of the nonrecognition exception and the general anti-avoidance rule in the Section 367 regulations.

The advisory also discusses final, temporary and proposed IRS regulations (T.D. 9650) relating to determining ownership of passive foreign investment companies (PFICs) and annual reporting requirements.

The full alert is provided on the Alston & Bird website: www.alston.com/advisories/int-tax-1-15-14

Written by Edward Tanenbaum, Partner, Federal & International Tax | Alston & Bird LLP

Filed Under: International - Corporate Tax Planning, International Tax Advisory

About Edward Tanenbaum

Edward Tanenbaum is co-chair of the firm’s Federal & International Tax Group and a member of the firm’s Global Resources & Strategies Committee. Mr. Tanenbaum’s practice consists primarily of planning and structuring tax efficient solutions for cross-border business transactions and investments by foreign multinational corporations and high-net-worth individuals.

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About Heather Ripley

Heather Ripley is an associate in the firm’s Federal & International Tax Group. Her practice focuses on federal and international tax services for a range of clients, including domestic and international business entities and individuals.

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