Summary
Proposed regulations under IRC section 7701(l) empower IRS district directors to look through financing arrangements that involve an intermediary that is related to the principals when applying the 30% tax on US source income. These conduit regulations will be applied to back-to-back loans, debt guarantees and equity investments. The director will examine whether the arrangement is of the sort that the conduit would enter into voluntarily if it were not for the loan from the ultimate financing source.
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Extract
Conduit financing arrangements.
On October 11, 1994, the IRS issued the first part of proposed regulations on conduit financing arrangements under IRC section 7701(l). The proposed regulations provid...
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