Alston & Bird Tax Blog

International Tax Advisory: IRS Says Income on Federal Reserve Collateral of Foreign Bank Must Be Allocated Between ECI and Non-ECI

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In a recently released Technical Advice Memorandum (TAM) 201325012, the IRS said that interest earned by a foreign bank on notes pledged as collateral for access to the Federal Reserve must be allocated between effectively connected income (ECI) and non-ECI under the “Ten Percent Rule” in Regulations Section 1.864-4(c)(5)(ii)(b)(3).

The advisory is provided in PDF on the Alston & Bird website: www.alston.com/advisories/int-tax-7-15-13

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

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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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