Working with the New Section 367 indirect transfer and GRA rules

The past several years have seen repeated changes to the rules under Internal Revenue Code Section 367, most recently in the form of final and temporary regulations under Section 367(a), (b), and (d) and Section 6038B. A discussion is presented on the 1998 regulations, focusing extensively on 2 areas most likely to be of concern to international tax practitioners and to taxpayers engaging in cross-border transactions: new indirect transfer rules and changes to the gain recognition agreement regime. The discussion of the indirect transfer includes description of the principal fact patterns where those rules can now require income recognition under Section 367(a). Planning approaches and hazards are also described.