Corporate Tax Watch: Code Sec. 385 in Limbo

There are two important preconditions for most tax planning: a clear understanding of the current rules and a view as to how those rules might change in the future. Both of these requirements have been in short supply recently, whether on the international front with the EU's focus on State Aid and the BEPS process or here in the US with the prospect of tax reform and significant regulatory changes. This column focuses on one such source of uncertainty: the Code Sec. 385 regulations. Readers likely will be familiar with the Code Sec. 385 rules, which were proposed by the Obama administration in April 2016 as part of an effort to stymie inversion transactions.