New Filing Date for Foreign Bank Account Return

istock-tax-blog-cliffBy:  Amanda Wilson

If you have a foreign bank account (or signatory authority on a foreign bank account), you are required to file a Form 114 (commonly called an FBAR) if at any point during the calendar year the combined balance in all of your foreign accounts exceeds $10,000.  Failure to file the FBAR can result in hefty penalties and even criminal charges.  I previously discussed FBARS here.

Why am I bringing this up again?  Because the filing deadline has moved from June 30th to April 15th.  The good news, though, is that the government is granting all filers an automatic 6 month extension to October 15th.   No extension request is necessary.

New Temporary Inversion Regulations

istock-tax-blog-cliffBy:  Amanda Wilson

The IRS once again is targeting inversions, and this time there have been immediate tangible results.

The IRS issued temporary regulations on Monday targeting inversion transactions.  An inversion occurs where a foreign corporation “acquires” a US corporation, such that the US corporation moves offshore to a more tax-advantageous location.  The result is a significant reduction in tax rates.  The foreign acquiring corporation typically is dwarfed in size by the US corporation.

To maximize the tax benefits of an inversion, the former shareholders of the US corporation need to hold less than 60% of the stock of the foreign parent post inversion (otherwise there is a tax on the inversion).   One of the key provisions of the temporary regulations is a three year look-back period pursuant to which parent stock attributable to prior inversions or acquisitions of US company stock is disregarded.   In other words, the foreign parent cannot do multiple inversions to build up its size so that it can acquire larger and larger companies.    This three year look-back rule makes it harder for inversions to satisfy the less than 60% ownership requirement .

This provision has already shut down one pending inversion – as Pfizer just announced that it will not go through with its proposed inversion with Allergan.

IRS Finalizes Regs on F Reorgs

istock-tax-blog-cliffBy: Amanda Wilson

The IRS has finalized its regulations  on Section 368(a)(1)(F) reorganizations.  An F reorganization is characterized as a mere change in the identity, form, or place of organization of one corporation.

The final regulations provide clarity as to what other changes can occur before, during or after the mere change in identity, form, or place of organization without jeopardizing the tax-free qualification of the reorganization.  The regulations also address the treatment of an outbound F reorganization.

The regulations apply to transactions occurring on or after September 21, 2015.

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