Opportunity For Increased Foreign Subsidiary Report: New IRS Proposed Tax Regulation Limiting '956 Deemed Dividend' Tax Impact
Jonathan Cooper and Stephen Legatzke, partners in the firm's Commercial Finance and Corporate, Securities and Tax groups, recently co-authored an article in The Secured Lender entitled "Opportunity For Increased Foreign Subsidiary Report: New IRS Proposed Tax Regulation Limiting '956 Deemed Dividend' Tax Impact".
The article discusses Section 956 of the US Tax Code which is often one of the main obstacles to cross-border lending. Section 956 often treats guarantees and collateral provided by foreign subsidiaries to support loans to U.S. borrowers as deemed taxable dividends. The IRS recently announced a proposed regulation that, if finalized, could substantially eliminate such obstacle and enable lenders to significantly expand their cross-border lending activities and improve their collateral positions.
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