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In Private Letter Ruling, IRS Says Certain Proposed Transactions Not Taxable

January 31, 2024

Private Letter Ruling: IRS Says Proposed Transactions Not Subject to Tax
In a private letter ruling published January 26, the IRS found that a series of proposed transactions under Sections 355 and 368 will not be taxable. In the transactions, a foreign parent’s foreign subsidiary will capitalize on intercompany obligations owed by another subsidiary of its own. The foreign subsidiary then will redeem the preferred shares it issued to a newly incorporated entity for a note, and the newly incorporated entity will redeem the preferred shares it issued to the foreign subsidiary. The transactions in their entirety, as well as the capitalization, will qualify as a reorganization under Sections 355 and 368.


IRS Publishes Reminder on Digital Asset Income Reporting
The IRS issued a news release January 22 informing taxpayers that all digital asset income must be reported on 2023 federal income tax returns. Those who file Forms 1040, 1040-SR, 1040-NR, 1041, 1065, 1120 and 1120-S must also check the box on the digital asset question. Digital assets required to be reported include convertible virtual currency and cryptocurrency, stablecoins and non-fungible tokens.


Businesses Criticize EU Tax Reforms 
Certain business groups and accounting firms have argued that a tax reform proposal in the European Union would increase compliance costs. They claim the proposal, the Business in Europe: Framework for Income Taxation (BEFIT), would be inconsistent with the Organisation for Economic Co-operation and Development (OECD) Pillar Two’s global minimum tax enforcement. One of the groups, the American Chamber of Commerce to the European Union (AmCham EU), said the current proposal would be more burdensome and complex for taxpayers.

Information contained in this publication should not be construed as legal advice or opinion or as a substitute for the advice of counsel. The articles by these authors may have first appeared in other publications. The content provided is for educational and informational purposes for the use of clients and others who may be interested in the subject matter. We recommend that readers seek specific advice from counsel about particular matters of interest.

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