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On October 10, 2024, Treasury and the IRS released final regulations under section 367(d) ("Final Regulations") that provide guidance on how section 367(d) applies after taxpayers repatriate intangible property (IP) that has been subject to the deemed royalty provisions in section 367(d). The Final Regulations build off the proposed regulations released by Treasury and the IRS on May 2, 2023 ("Proposed Regulations"), which provided guidance to taxpayers on how the deemed royalty provisions in section 367(d) applied when taxpayers repatriated previously outbounded section 367(d) IP.1
Although Treasury and the IRS received comments from taxpayers providing substantive feedback to the Proposed Regulations, the Final Regulations did not adopt any of the substantive recommendations from stakeholders. As such, the Final Regulations largely stay the course of the Proposed Regulations, with few substantive updates.
The Final Regulations apply for transactions on or after October 10, 2024, and do not have retroactive effect.
Click here to read the full alert.
1 See Baker McKenzie's previous alert on section 367(d) proposed regulations, United States: The Route to Tax-Free IP Repatriation, https://insightplus.bakermckenzie.com/bm/tax/united-states-the-route-to-tax-free-ip-repatriation.
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