Skip to Main Content
 

Law360 Quotes Elizabeth Stevens: Lack of Noncash Exceptions in BEAT Rules Has Wide Scope

December 18, 2018, Law360

Proposed base erosion and anti-abuse tax regulations provide U.S. multinationals with much-needed answers to calculation questions, but the inclusion of noncash transactions without any exceptions — including when there aren’t recognized gains or losses — could take companies by surprise.

. . .

In the absence of any regulations, a U.S. company might try to get around this category by arguing that no base erosion occurred because it didn’t pay cash to acquire the assets from a foreign affiliate, according to Elizabeth Stevens of Caplin & Drysdale.

“But there has been value that’s been transferred to the foreign person in exchange for the asset,” she said.

If the foreign party had a basis greater than zero, then usually in a nonrecognition transaction, the U.S. acquirer would take a transferred basis and depreciate it, Stevens noted.

She predicted the first category of base erosion payments under the statute, which covers “a payment with respect to which a deduction is allowable,” will have the biggest impact for companies.

. . .

As Stevens saw it, the statute itself was an invitation for companies to drill down into their cost accounting, and the regulations reiterated that.

“There are a lot of existing rules in case law, in statutes [and] in regulations,” she said. “They have become more relevant because of the BEAT, but they are what they are.”

For the full article, please visit Law360’s website (subscription required).

Excerpt taken from the article “Lack of Noncash Exceptions in BEAT Rules Has Wide Scope” by Natalie Olivo for Law360.

________________________________________________

About Caplin & Drysdale
Having celebrated our 50th Anniversary in 2014, Caplin & Drysdale continues to be a leading provider of legal services to corporations, individuals, and nonprofits throughout the United States and around the world. We are also privileged to serve as legal advisors to accounting firms, financial institutions, law firms, and other professional services organizations.

The firm's reputation over the years has earned us the trust and respect of clients, industry peers, and government agencies. Moreover, clients rely on our broad knowledge of the law and our keen insights into their business concerns and personal interests. Our lawyers' strong tactical and problem-solving skills -- combined with substantial experience handling a variety of complex, high stakes, matters in a boutique environment -- make us one the nation's most distinctive law firms.

With offices in New York City and Washington, D.C., Caplin & Drysdale's core practice areas include:
For more information, please visit us at www.caplindrysdale.com.
Washington, DC Office:
One Thomas Circle NW
Suite 1100
Washington, DC 20005
202.862.5000
New York, NY Office:
600 Lexington Avenue
21st Floor
New York, NY 10022
212.379.6000

___________________________

Disclaimer
This communication does not provide legal advice, nor does it create an attorney-client relationship with you or any other reader. If you require legal guidance in any specific situation, you should engage a qualified lawyer for that purpose. Prior results do not guarantee a similar outcome.

Attorney Advertising
It is possible that under the laws, rules, or regulations of certain jurisdictions, this may be construed as an advertisement or solicitation.
© 2019 Caplin & Drysdale, Chartered
All Rights Reserved.