chairman camp’s discussion draft of tax reform act … · chairman camp’s discussion draft of...
TRANSCRIPT
New York Washington, D.C. Los Angeles Palo Alto London Paris Frankfurt
Tokyo Hong Kong Beijing Melbourne Sydney
www.sullcrom.com
March 25, 2014
Chairman Camp’s Discussion Draft of Tax Reform Act of 2014 and President Obama’s Fiscal Year 2015 Revenue Proposals
Proposals Relating to International Taxation
SUMMARY
On February 26, 2014, Ways and Means Committee Chairman Dave Camp released a discussion draft of
tax reform legislation entitled the “Tax Reform Act of 2014” (the “Discussion Draft”). Although the
Discussion Draft is unlikely to be enacted in its current form, some or all of the proposals may serve as a
template for future legislation. In addition, on March 4, 2014, the Obama Administration (the
“Administration”) released the General Explanations of the Administration’s Fiscal Year 2015 Revenue
Proposals (commonly known as the “Green Book”). Although the Green Book does not include proposed
statutory language, the Green Book contains significant detail about the fiscal year 2015 revenue
proposals. Many of these proposals were made previously by the Administration but were not enacted
into law.
This memorandum discusses key aspects of the Discussion Draft and the Green Book relating to
international taxation that we anticipate may be of interest to our clients. We will be distributing separate
memoranda addressing the Discussion Draft and Green Book proposals relating to (i) domestic business
taxation, and (ii) individuals, retirement plans and estate and gift taxation, both of which may be obtained
by following the instructions at the end of this memorandum.
The Discussion Draft proposes comprehensive changes to the existing international taxation regime, and
includes the following specific proposals:
shifting toward a territorial tax system by establishing a 95 percent deduction for the foreign-source portion of dividends received by domestic corporations from “specified 10 percent owned foreign
-2- Chairman Camp’s Discussion Draft of Tax Reform Act of 2014 and President Obama’s Fiscal Year 2015 Revenue Proposals March 25, 2014
corporations,” but requiring that shareholders of such corporations include as income (with up to a 90 percent deduction) their share of the corporations’ accumulated untaxed income;
making the look-through rule for related controlled foreign corporations permanent;
taxing foreign intangible income at the reduced rate of 15 percent but subjecting such income to Subpart F (i.e., taxing a U.S. shareholder of a controlled foreign corporation earning such income on a current basis whether such income is distributed or not) unless such income qualifies for the high taxed exclusion);
extending the exemption from Subpart F of qualified banking or finance income and qualified insurance income, but limiting the exemption to only 50 percent of the income earned if the income is not subject to tax at a rate that is at least 50 percent of the U.S. maximum rate of corporate tax;
denying interest deduction for members of worldwide affiliated groups with excess domestic indebtedness;
making the high-tax exception to Subpart F non-elective and creating an exception to foreign base company sales income for income earned by a foreign subsidiary incorporated in a country that has a comprehensive income tax treaty with the United States;
restricting the insurance business exception to passive foreign investment company rules;
tightening limitations on earnings stripping; and
limiting treaty benefits for certain deductible related party payments.
The Green Book proposals relating to international taxation include:
providing for reciprocal reporting of information in connection with the implementation of the Foreign Account Tax Compliance Act (“FATCA”);
creating a new category of Subpart F income for transactions involving digital goods or services;
preventing avoidance of foreign base company sales income through manufacturing services arrangements;
restricting the use of hybrid and reverse hybrid arrangements that create stateless income;
imposing additional limitations on “inversion” transactions;
exempting foreign pension funds from the application of the Foreign Investment in Real Property Tax Act (“FIRPTA”);
deferring interest deductions related to deferred foreign income;
determining foreign tax credit pools on an aggregate basis;
currently taxing some types of income from intangible property transferred to offshore related parties and clarifying (or broadening) the definition of intangible property;
modifying the foreign tax credit rules for dual capacity taxpayers;
taxing some gain from the sale of a partnership interest as effectively connected to a U.S. trade or business and requiring withholding in certain circumstances;
taxing certain leveraged distributions from related foreign corporations;
placing additional limits on the use of foreign tax credits in the case of certain asset acquisitions; and
removing foreign taxes from the foreign tax pool in the case of certain domestic shareholder corporations when earnings are eliminated from a foreign subsidiary.
-3- Chairman Camp’s Discussion Draft of Tax Reform Act of 2014 and President Obama’s Fiscal Year 2015 Revenue Proposals March 25, 2014
Finally, both the Green Book and the Discussion Draft propose disallowing deductions for non-taxed
reinsurance premiums paid to offshore affiliates.
ANALYSIS
A. DISCUSSION DRAFT PROPOSALS
1. Shifting Toward a Territorial Tax System
The Discussion Draft proposal would establish a participation exemption system by means of a
95 percent deduction for the foreign-source portion of dividends received by domestic corporations from
“specified 10 percent owned foreign corporations.”1 A “specified 10 percent owned foreign corporation”
would be any foreign corporation in which a domestic corporation owns, directly or indirectly, 10 percent
or more of the voting stock of that foreign corporation.
The 95 percent participation exemption would be allowed only if the domestic corporation satisfies a six-
month holding period requirement with respect to the stock on which the dividend is paid under rules
similar to those currently in effect for the existing dividends-received deduction.
No foreign tax credit or deduction would be allowed for any tax in respect of any dividend for which the
95 percent participation exemption is allowed. A foreign tax credit or deduction would be allowed for
foreign tax imposed on income included under Subpart F (which would continue to be fully taxable)2 for
foreign tax paid directly by a domestic corporation on foreign-source income (e.g., income from foreign
operations), and for foreign withholding tax levied on non-dividend payments such as payments of
royalties or interest.
A special loss limitation rule would require, solely for the purposes of determining the amount of loss on
disposition of stock, a domestic corporation to reduce its basis by the amount of the dividend received
with respect to stock of a specified 10 percent owned foreign corporation.3 In addition, losses incurred in
a foreign branch after the effective date of the 95 percent participation exemption would, upon the transfer
of substantially all assets of the foreign branch to a foreign subsidiary, be required to be included in
1 See Section 4001 of the Discussion Draft and new Section 245A of the Internal Revenue Code of
1986, as amended (the “Code”).
2 Under the Subpart F rules, a “10 percent U.S. shareholder” (taking into account a number of
attribution and constructive ownership rules) of a controlled foreign corporation (a “CFC”) is generally subject to current U.S. tax on dividends, interest, royalties, rents, and other types of passive income earned by the CFC, regardless of whether the CFC actually distributes such income to the U.S. shareholder.
3 See Section 4002 of the Discussion Draft and Sections 367(a)(3)(C) and 961 and new Section 91 of
the Code.
-4- Chairman Camp’s Discussion Draft of Tax Reform Act of 2014 and President Obama’s Fiscal Year 2015 Revenue Proposals March 25, 2014
income to the extent the domestic corporation receives exempted dividends from any of its foreign
subsidiaries.
A transition tax would be imposed on all previously untaxed foreign earnings and profits of a specified
10 percent owned foreign corporation immediately prior to the effective date of the 95 percent
participation exemption system, with earnings and profits retained in the form of cash, cash equivalents
and other short-term assets taxed at a rate of 8.75 percent and the remaining earnings and profits (that
have been reinvested in the foreign subsidiary’s business) taxed at a rate of 3.5 percent.4 The transition
tax could be paid in installments over a period of up to eight years.
These proposals are intended to eliminate the “lock-out” effect that results from the U.S. residual tax
which is imposed under current law on repatriated earnings to the extent that foreign tax credits are
insufficient to offset the U.S. tax liability on the repatriated earnings. According to the Discussion Draft,
this residual tax discourages companies from bringing their foreign earnings back into the U.S.5 According
to the Draft proposals, instituting the participation exemption system described above would reduce
revenues by $42 billion over the 10-year period between 2014 and 2023 (when taking into account the
additional revenue from the transition tax).6
These proposals would be effective for tax years of foreign corporations beginning after 2014, and for tax
years of U.S. shareholders in which or with which such tax years of foreign subsidiaries end. The special
loss limitation rule would be effective for transfers after 2014.
2. Permanent Look-Through Rule for Related Controlled Foreign Corporations
Under current law, a 10 percent U.S. shareholder (taking into account a number of attribution and
constructive ownership rules) of a CFC generally is subject to current U.S. tax on its dividends, interest,
royalties, rents, and other types of passive income earned by the CFC, regardless of whether the CFC
distributes such income to the U.S. shareholder. However, for tax years of CFCs beginning before
January 1, 2014, and tax years of U.S. shareholders in which or with which such tax years of the CFC
end, Section 954(c)(6) of the Code provided a “look-through” exception under which such passive income
will generally not be subject to Subpart F rules if the income was received by a CFC from a related CFC
4 See Section 4003 of the Discussion Draft and Sections 965 and 9503 of the Code. The tax would be
implemented by a mandatory Subpart F inclusion (regardless of whether the foreign corporation were a CFC) by U.S. shareholders owning at least 10 percent of a foreign subsidiary of the amount of all previously untaxed foreign earnings and profits, with a 75 percent deduction for earnings and profits retained in the form of cash or cash equivalents (for an effective tax rate of 8.75 percent based on a corporate tax rate of 35 percent) and a 90 percent deduction for the remaining earnings and profits (for an effective tax rate of 3.5 percent based on a corporate tax rate of 35 percent).
5 See Section 4001 of the Discussion Draft.
6 See id.
-5- Chairman Camp’s Discussion Draft of Tax Reform Act of 2014 and President Obama’s Fiscal Year 2015 Revenue Proposals March 25, 2014
(provided such income was not subject to current U.S. tax or effectively connected with a U.S. trade or
business).
The Discussion Draft proposes to make the look-through rule permanent, effective for tax years of foreign
subsidiaries beginning after January 1, 2014, and for tax years of U.S. shareholders in which or with
which such tax years of foreign subsidiaries end.7
3. Foreign Intangible Income Taxed under Subpart F
Under current law, a foreign subsidiary that owns intangible property in a foreign jurisdiction may, in
certain circumstances, be allocated profits, consistent with transfer pricing rules, without resulting in an
inclusion of Subpart F income by the U.S. parent of such foreign subsidiary, thus deferring U.S. tax on
those profits until they are distributed to the U.S. parent. According to the Discussion Draft, the adoption
of a participation exemption system could, without appropriate safeguards, exacerbate this incentive by
creating a path through which shifted profits could be repatriated with minimal U.S. tax consequences.
The Discussion Draft proposes to create a new category of Subpart F income, “foreign base company
intangible income” (“FBCII”), equal to the excess of the foreign subsidiary’s gross income over 10 percent
of the foreign subsidiary’s adjusted basis in depreciable tangible property (excluding income and property
related to commodities).8 FBCII would generally be subject to an effective tax rate of 15 percent. This
effective tax rate would also be available for domestic corporations that earn foreign intangible income
directly (rather than through a foreign subsidiary). Although the proposal seems to target the activities of
companies that develop digital software or other forms of mobile intellectual property, the proposal is
stated broadly enough to also reach the activities of service-based businesses and financial companies
(each of which will have minimal depreciable tangible property) for which the proposal does not provide
specific exceptions. FBCII would, however, only be subject to current taxation in the U.S. under Subpart
F to the extent it is subject to a foreign effective tax rate lower than the 15 percent effective U.S. tax rate
imposed on FBCII.
With regard to the treatment of FBCII as subject to current U.S. tax, the proposal would be effective for
tax years of foreign corporations beginning after 2014, and for tax years of U.S. shareholders in which or
with which such tax years of foreign subsidiaries end. The lower effective tax rate that would generally be
imposed on FBCII would be effective for tax years beginning after 2014.
7 See Section 4004 of the Discussion Draft and Section 954(c)(6) of the Code.
8 See Section 4211 of the Discussion Draft and Section 954 of the Code.
-6- Chairman Camp’s Discussion Draft of Tax Reform Act of 2014 and President Obama’s Fiscal Year 2015 Revenue Proposals March 25, 2014
4. Denial of Interest Deduction for Members of Worldwide Affiliated Groups with Excess Domestic Indebtedness
Under current law, corporations generally can deduct all of their interest expense even if the debt was
acquired to capitalize foreign subsidiaries. However, expense allocation rules may require that interest
expense be allocated against foreign source income, which may limit the amount of foreign tax credits
that the U.S. parent can claim. According to the Discussion Draft, in conjunction with the adoption of the
participation exemption system it is important to provide measures to discourage excessive leveraging,
and deny an interest deduction to borrowings deemed attributable to largely tax-exempt income from
foreign participations.9
Under the Discussion Draft proposal, the deductible net interest expense of a U.S. parent of one or more
foreign subsidiaries would be reduced by the lesser of the extent to which (i) the indebtedness of the
U.S. parent (including other members of the U.S. consolidated group) exceeds 110 percent of the
combined indebtedness of the worldwide affiliated group which is the U.S. parent and its domestic and
foreign subsidiaries but does not include foreign parents or other related foreign entities,10
or (ii) net
interest expense exceeds 40 percent of the adjusted taxable income of the U.S. parent.11
Any disallowed
interest expense could be carried forward to a subsequent tax year but would remain subject to similar
limitations in subsequent years.
This proposal would be effective for tax years beginning after 2014.
5. Subpart F Income: High Tax and Treaty Exceptions
Under current law, a U.S. parent of a foreign subsidiary is subject to current U.S. tax on Subpart F income
of the foreign subsidiary, regardless of whether or not the income is distributed to the U.S. parent. If,
however, the Subpart F income has been taxed at a rate that is at least 90 percent of the U.S. tax rate,
then the U.S. parent may elect to treat that income as non-Subpart F income. The 90 percent threshold
is the same regardless of whether the category of Subpart F income is foreign personal holding company
income (“FPHCI”) (generally interest, dividends, rents, royalties and gains on property that produced any
of the foregoing) or foreign base company sales income (“FBCSI”) (income from the sale of goods
involving a related party) or some other category.
Under the Discussion Draft, the high tax exception would no longer be elective.12
Further, the Discussion
Draft proposes to increase the threshold for the high tax exception from 90 percent to 100 percent for
9 See Section 4212 of the Discussion Draft.
10 This is because this proposal is focused on preventing abuse of the participation exemption system.
11 See Section 4212 of the Discussion Draft and Section 163 of the Code.
12 See Section 4202 of the Discussion Draft and Sections 954 and 960 of the Code.
-7- Chairman Camp’s Discussion Draft of Tax Reform Act of 2014 and President Obama’s Fiscal Year 2015 Revenue Proposals March 25, 2014
FPHCI (i.e., 25 percent under the proposed corporate tax rate), and to establish a threshold of 50 percent
for FBCSI (i.e., 12.5 percent under the proposed corporate tax rate) and 60 percent for FBCII (i.e.,
15 percent under the proposed corporate tax rate). The proposal would also create an exception to
FBCSI for income earned by a foreign subsidiary that is incorporated in a country that has a
comprehensive income tax treaty with the United States.
This proposal would be effective for tax years of foreign corporations beginning after 2014, and for tax
years of U.S. shareholders in which or with which such tax years of foreign subsidiaries end.
6. Extension of the Active Finance Exemption from Subpart F with Limitation for Low-Taxed Foreign Income
Under a provision originally enacted in 1997 and extended several times thereafter, there is an exclusion
from Subpart F income for income derived in the active conduct of banking, financing, or similar
businesses, or in the conduct of an insurance business (“active financing income”).13
The most recent
extension in 2013 was effective for taxable years of foreign subsidiaries beginning before 2014 and U.S.
shareholders in which or with which such taxable years of the foreign subsidiary end.
The Discussion Draft proposes to extend the exception for active financing income for five years.
However, the exception will be limited only to active financing income that is subject to a foreign effective
tax rate of at least 12.5 percent (i.e., 50 percent of the new maximum corporate tax rate). Active
financing income that is subject to a foreign tax that is lower than 12.5 percent would not be exempt, but
would be subject to a reduced U.S. tax rate of 12.5 percent, before application of foreign tax credits.14
This proposal would be effective for tax years of foreign corporations beginning after 2013 and before
2019, and for tax years of U.S. shareholders in which or with which such tax years of foreign subsidiaries
end.
7. Restriction on Insurance Business Exception to Passive Foreign Investment Company Rules
Under current law, U.S. shareholders’ investment in a passive foreign investment company (“PFIC”) is
subject to adverse tax consequences. A PFIC is defined as any foreign corporation (i) 75 percent or
more of the gross income of which is passive, and (ii) at least 50 percent of the assets of which produce
passive income. Among other exceptions, passive income does not include any income that is derived in
the active conduct of an insurance business if the foreign corporation is predominantly engaged in an
insurance business and would be taxed as an insurance company were it a U.S. corporation.
13
See Sections 953(e), 954(h), and 954(i) of the Code.
14 See Section 4204 of the Discussion Draft.
-8- Chairman Camp’s Discussion Draft of Tax Reform Act of 2014 and President Obama’s Fiscal Year 2015 Revenue Proposals March 25, 2014
Under the Discussion Draft proposal, the insurance business exception would be modified to replace the
test based on whether a foreign corporation is predominantly engaged in an insurance business with a
test based on the gross receipts of the corporation consisting of premiums. Specifically, the PFIC
exception for insurance companies would apply only if (i) the foreign corporation would be taxed as an
insurance company under Subchapter L of the Code if it were a domestic corporation, (ii) more than
50 percent of the foreign corporation’s gross receipts for the tax year consist of premiums, and
(iii) specific insurance liabilities (such as loss and loss adjustment expenses, unearned premiums, and
certain reserves) constitute more than 35 percent of the foreign corporation’s total assets.15
The proposal
would be effective for tax years beginning after 2014.
8. Modification of Limitation on Earnings Stripping Rule
Under current law, a U.S. corporation generally may deduct interest payments, including payments to a
related party. However, if the taxpayer’s debt-to-equity ratio (calculated in accordance with rules set out
in the relevant Code section) exceeds 1.5 to 1, a deduction for interest payments to certain related parties
that are not subject to U.S. tax (e.g., foreign corporations) is disallowed to the extent the taxpayer has
“excess interest expense”. Excess interest expense is the amount by which the taxpayer’s “net interest
expense” (i.e., interest expense less interest income) exceeds 50 percent of the taxpayer’s “adjusted
taxable income” (generally taxable income computed without regard to deductions for net interest
expense, net operating losses, certain cost recovery, and domestic production activities). Any disallowed
interest deductions may be carried forward indefinitely, while any “excess limitation” (the excess of
50 percent of the corporation’s adjusted taxable income over the corporation’s net interest expense) may
be carried forward three years.
Under the Discussion Draft proposal, the threshold for excess interest expense would be reduced to
40 percent of adjusted taxable income.16
In addition, corporations would no longer be permitted to carry
forward any excess limitation. The proposal would be effective for tax years beginning after 2014.
9. Limitation on Treaty Benefits for Certain Deductible Payments
Under current law, certain payments of fixed or determinable, annual or periodical (“FDAP”) income —
such as interest, dividends, rents, and annuities — to foreign recipients are subject to a statutory
30 percent withholding tax. Income tax treaties between the United States and other countries, however,
often reduce or eliminate this withholding tax for payments from residents of one treaty country to
residents of the other treaty country.
15
See Section 3703 of the Discussion Draft and Section 1297 of the Code.
16 See Section 3704 of the Discussion Draft and Section 163(j) of the Code.
-9- Chairman Camp’s Discussion Draft of Tax Reform Act of 2014 and President Obama’s Fiscal Year 2015 Revenue Proposals March 25, 2014
Under the Discussion Draft proposal, if a payment of FDAP income is deductible in the United States by
the payor and if both payor and payee are controlled by the same foreign parent corporation, then the
statutory 30 percent withholding tax on such income would not be reduced by any treaty unless the
withholding tax would have been reduced under a tax treaty if the payment were made directly to the
foreign parent corporation.17
The proposal would be effective for payments made after the date of
enactment.
B. COMMON PROPOSALS
1. Disallowance of Deduction for Non-Taxed Reinsurance Premiums Paid to Affiliates
Under current law, insurance companies are generally permitted to deduct premiums paid for
reinsurance, including premiums paid to foreign affiliates. While Subpart F limits the ability of domestic
insurance companies to use reinsurance with foreign affiliates to avoid current U.S. taxation (because the
foreign affiliate’s reinsurance premium income is Subpart F income), foreign insurance companies with
foreign parents are not subject to the Subpart F regime. Current law does, however, impose a
one percent excise tax on reinsurance premiums paid to foreign reinsurance companies with respect to
U.S. risks.
The Green Book and the Discussion Draft18
provide substantially similar proposals that would deny an
insurance company deductions for premiums and other amounts paid to an affiliated foreign company
with respect to reinsurance of property and casualty risks to the extent that neither the foreign reinsurer
nor its parent company is subject to U.S. income tax with respect to the premiums. The denial of the
deduction would not apply if the foreign reinsurance company elected to treat the premium (and the
associated investment income) as income effectively connected with a U.S. trade or business and
attributable to a permanent establishment for tax treaty purposes. If the election is made, the income
would be foreign source and in a separate foreign tax credit limitation basket. Under the Discussion
Draft proposal, unlike the Green Book proposal, the denial of the deduction would not apply if the
taxpayer demonstrates to the Internal Revenue Service (“IRS”) that a foreign jurisdiction taxes the
reinsurance premiums at a rate as high as or higher than the U.S. corporate rate.
17
See Section 3705 of the Discussion Draft and Section 894(d) of the Code.
18 See Section 3701 of the Discussion Draft and new Section 849 of the Code.
-10- Chairman Camp’s Discussion Draft of Tax Reform Act of 2014 and President Obama’s Fiscal Year 2015 Revenue Proposals March 25, 2014
The Green Book proposal would be effective for policies issued in taxable years beginning after
December 31, 2014, and thus would apparently not apply to any policies issued before December 31,
2014. The Discussion Draft proposal would be effective for taxable years beginning after December 31,
2014.
C. GREEN BOOK PROPOSALS
1. Provide for Reciprocal Reporting of Information in Connection with the Implementation of the Foreign Account Tax Compliance Act (“FATCA”)
The Foreign Account Tax Compliance Act (“FATCA”) generally requires foreign financial institutions that
wish to avoid imposition of a new U.S. withholding tax to report to the IRS comprehensive information
about U.S. account holders of financial accounts. This includes, for example, account balances, amounts
of dividends, interest and gross proceeds credited to a U.S. account, and, with respect to accounts held
by passive foreign entities, information about any substantial U.S. owner of such entity.
The Green Book states that the ability to exchange information reciprocally with other jurisdictions is key
to the successful implementation of FATCA and that, in many cases, the law of foreign jurisdictions would
prevent foreign financial institutions from complying with the FATCA reporting provisions.19
Intergovernmental agreements have been entered into in order to mitigate such legal impediments and
the Green Book asserts that such intergovernmental cooperation would be facilitated if the IRS could
provide equivalent levels of information to foreign governments to support their efforts to address tax
evasion by their residents.20
The Green Book proposal would require certain financial institutions to report to the IRS the account
balance (including the cash value or surrender value of cash value insurance or annuity contracts) for all
financial accounts maintained at a U.S. office and held by foreign persons. The Green Book proposal
would also expand the reporting required with respect to U.S. source income paid to accounts held by
foreign persons to include similar non-U.S. source payments. The Green Book proposal would grant the
Secretary of the Treasury authority to issue Treasury regulations that will require financial institutions to
report information with respect to gross proceeds from the sale or redemption of property, accounts held
by passive entities with substantial foreign ownership, as well as other types of information. The IRS
could, in turn, share such information with foreign governments with which the United States has entered
into information sharing agreements. The proposal would be effective for tax returns to be filed after
December 31, 2015.
19
See Green Book, page 203.
20 On its website, the U.S. Treasury Department provides a list of jurisdictions which are treated as
having an intergovernmental agreement in effect. See http://www.treasury.gov/resource-center/tax-policy/treaties/Pages/FATCA-Archive.aspx.
-11- Chairman Camp’s Discussion Draft of Tax Reform Act of 2014 and President Obama’s Fiscal Year 2015 Revenue Proposals March 25, 2014
2. Create a New Category of Subpart F Income for Transactions Involving Digital Goods or Services
Under current law, Subpart F income includes several categories of income which, when earned by a
CFC, are currently included in the income of the CFC’s 10 percent U.S. shareholders. These categories
include, among others, foreign personal holding company income, foreign base company sales income,
and foreign base company services income, all of which are intended to ensure that tax is not deferred on
income that is not generated by an active trade or business of the CFC. The Green Book asserts that
taxpayers are able to avoid the Subpart F rules by choosing different forms for substantially similar
transactions involving digital goods and services (such as “cloud” computing), thereby eroding the
U.S. tax base.21
The Green Book proposal would create a new category of Subpart F income, foreign base company
digital income, which generally would include income of a CFC from the lease or sale of a digital
copyrighted article or from the provision of a digital service, in cases where the CFC uses intangible
property developed by a related party (including property developed pursuant to a cost sharing
arrangement) to produce the income and the CFC does not, through its own employees, make a
substantial contribution to the development of the property or services that give rise to the income.
Income earned by a CFC directly from customers located in the CFC’s country of incorporation that use or
consume the digital copyrighted article or digital service in such country will be excluded from this rule.22
The proposal would be effective for taxable years beginning after December 31, 2014.
3. Prevent Avoidance of Foreign Base Company Sales Income through Manufacturing Services Arrangements
Under current law, a 10 percent U.S. shareholder of a CFC is required to include its share of “foreign
base company sales income” generated by the CFC, which generally includes income earned with
respect to a purchase and subsequent sale of personal property where such property is purchased from
(or on behalf of), or sold to (or on behalf of), a related person, provided the property is manufactured
outside the CFC’s country of organization and sold for use or consumption outside that country. The
Green Book states that taxpayers have taken the position that foreign base company sales income does
not include the provision of manufacturing services to the CFC by a related party (as opposed to the
purchase of property by the CFC from a related party).23
The proposal would expand the category of foreign base company sales income to include income of a
CFC from the sale of property manufactured on behalf of the CFC by a related person. It is not clear how
21
See Green Book, page 58.
22 See Green Book, page 59.
23 See Green Book, page 60.
-12- Chairman Camp’s Discussion Draft of Tax Reform Act of 2014 and President Obama’s Fiscal Year 2015 Revenue Proposals March 25, 2014
this proposal would interact with the current exception from foreign base company sales income for
property manufactured or produced by a contract manufacturer but where the CFC substantially
contributes to the manufacturing.24
The proposal would be effective for taxable years beginning after
December 31, 2014.
4. Restrict the Use of Hybrid and Reverse Hybrid Arrangements that Create Stateless Income
Under current law, interest and royalty payments made or incurred in carrying on a trade or business are
generally deductible without regard to the tax treatment of such payments in other jurisdictions (subject to
certain exceptions and limitations). According to the Green Book, this has resulted in the development of
tax avoidance techniques involving a variety of cross-border hybrid arrangements,25
such as hybrid
entities, hybrid instruments, and hybrid transfers. The Green Book asserts that these arrangements
enable taxpayers to claim deductions in the United States without a corresponding inclusion of income in
the payee’s tax jurisdiction (i.e., the income is not subject to tax in any jurisdiction, and hence the name
“stateless income”), or to claim multiple deductions for the same payment in several jurisdictions.26
The Green Book also asserts that taxpayers make use of “reverse hybrid entities” (i.e., an entity treated
as a corporation for U.S. federal tax purposes and as transparent in the jurisdiction in which the entity is
organized) to take advantage of exceptions to the Subpart F rules in order to create “stateless income”
which is not subject to tax in any jurisdiction. Specifically, the Green Book asserts that such reverse
hybrid entities would generally not be subject to U.S. federal income tax on a current basis unless the
Subpart F rules apply and would generally not be subject to tax in the foreign jurisdiction because the
foreign jurisdiction takes the view that the entity is transparent and the income earned by the entity is
thereby derived by its U.S. owners. Even if a reverse hybrid entity is treated as a CFC, interest and
royalty income earned from certain related persons (which would otherwise qualify as Subpart F income)
may not be subject to current U.S. tax due to certain exceptions available under current law (e.g.,
exceptions that exempt payments between related parties from Subpart F treatment).
The Green Book proposes to deny deductions for interest and royalty payments made to related parties
under certain circumstances involving hybrid arrangements where there is no corresponding inclusion of
income to the recipient or if the arrangement would permit the taxpayer to claim an additional deduction
for the same payment in another jurisdiction.27
In addition, the proposal would grant the Treasury
24
See Treas. Reg. § 1.954-3(a)(4)(iv).
25 The Green book apparently uses “hybrid” as an adjective to refer to arrangements that are treated
differently for U.S. and foreign tax purposes.
26 See Green Book, page 61.
27 See Green Book, page 61.
-13- Chairman Camp’s Discussion Draft of Tax Reform Act of 2014 and President Obama’s Fiscal Year 2015 Revenue Proposals March 25, 2014
authority to issue any regulations necessary to carry out the purposes of this proposal, including
regulations that would: (i) deny interest or royalty deductions arising from certain hybrid arrangements
involving unrelated parties in appropriate circumstances, such as structured transactions; (ii) deny
deductions from certain conduit arrangements that involve a hybrid arrangement between at least two of
the parties to the arrangement; and (iii) deny a deduction claimed with respect to an interest or royalty
payment that, as a result of the hybrid arrangement, is subject to a reduced tax rate (which is at least 25
percent lower than the statutory rate) in the recipient’s jurisdiction.
Second, the Green Book also proposes that the related party exceptions will not apply to payments made
to a foreign reverse hybrid held directly by a U.S. owner when such amounts are treated as deductible
payments received from foreign related persons.28
These proposals would be effective for taxable years beginning after December 31, 2014.
5. Limitations on Inversion Transactions
Under current law, certain “inversion” transactions (whereby a domestic corporation is replaced by a
foreign corporation as the parent company of a multinational affiliated group of companies) result in
adverse tax consequences.29
These consequences depend on the level of shareholders’ ownership. If
the ownership of shareholders of the domestic corporation in the new foreign parent corporation is
80 percent or more (by vote or value), the new foreign parent corporation is treated as a domestic
corporation for all U.S. federal tax purposes (the “80-percent test”). If, however, the continuing
shareholder ownership is less than 80 percent but at least 60 percent, the foreign status of the foreign
parent is respected but certain other adverse tax consequences apply (the “60-percent test”). According
to the Green Book, domestic companies have been engaging in inversion transactions that trigger the 60-
percent test and still manage to reduce substantially the U.S. federal tax liability of the multinational group
with only a minimal change in operations.30
The Green Book proposal would broaden the definition of an inversion transaction by reducing the 80-
percent test to a greater than 50-percent test, and eliminating the 60-percent test. In other words, if the
ownership of shareholders of the domestic corporation in the new foreign parent corporation is more than
50 percent (by vote or value), the foreign parent would be treated as a U.S. corporation. The proposal
would also add a special rule whereby, regardless of the level of shareholder continuity, an inversion
transaction would occur if the affiliated group that includes the foreign corporation has substantial
business activities in the United States and the foreign corporation is primarily managed and controlled in
28
See Green Book, page 63.
29 See Section 7874 of the Code.
30 See Green Book, page 64.
-14- Chairman Camp’s Discussion Draft of Tax Reform Act of 2014 and President Obama’s Fiscal Year 2015 Revenue Proposals March 25, 2014
the United States. The proposal also provides that an inversion transaction can occur if there is an
acquisition either of substantially all of the assets of a U.S. partnership (regardless of whether such
assets constitute a trade or business) or of substantially all of the assets of a trade or business of a
domestic partnership. The proposal would be effective for transactions that are completed after
December 31, 2014.
6. Exempt Foreign Pension Funds from the Application of the Foreign Investment in Real Property Tax Act (“FIRPTA”)
FIRPTA generally requires nonresident alien individuals or foreign corporations to pay U.S. federal
income tax on gain from the sale of a direct, or indirect, interest in U.S. real property.31
FIRPTA is
intended to subject foreign investors to the same U.S. federal income tax treatment that applies to
U.S. investors on gains from the disposition of U.S. real property interests. This rule, however, may result
in unequal treatment of U.S. and non-U.S. pension funds: U.S. pension funds are generally exempt from
U.S. federal income tax, including any U.S. federal income tax on the gain from a disposition of a
U.S. real property interest, while foreign pension funds would be required under FIRPTA to pay
U.S. federal income tax on any gain from a disposition of a U.S. real property interest.
The Green Book proposal would eliminate this disparity and exempt foreign pension funds from the
application of FIRPTA gains. To qualify for this exemption, a foreign pension fund would have to be (i) a
foreign organization or arrangement, (ii) generally exempt from income tax in the jurisdiction in which it is
created or organized, and (iii) substantially all of its activity would have to consist of administering or
providing pension or retirement benefits. The proposal does not, however, address the taxation of rent or
similar income. The proposal would be effective for dispositions of U.S. real property interests occurring
after December 31, 2014.
7. Defer Deduction of Interest Expense Related to Deferred Foreign Income
Under current law, a U.S. person’s total interest expense is generally allocated and apportioned between
the person’s U.S. assets and foreign assets, and the interest allocated to the foreign assets is treated as
a foreign source expense. That foreign source interest expense may be currently deducted even if the
foreign assets to which it was allocated did not currently generate any foreign income subject to
U.S. tax.32
The Green Book proposal would defer the deduction of interest expense that is allocated and apportioned
to “stock of a foreign corporation that exceeds an amount proportionate to the taxpayer’s pro rata share of
31
See Section 897 of the Code.
32 See generally Treas. Regs. §§ 1.861-9 through 1.861-13.
-15- Chairman Camp’s Discussion Draft of Tax Reform Act of 2014 and President Obama’s Fiscal Year 2015 Revenue Proposals March 25, 2014
income from such subsidiaries that is currently subject to U.S. tax.” For this purpose, foreign-source
income earned by a taxpayer through a branch would be considered currently subject to U.S. tax.
The Green Book provides that while current Treasury regulations would generally continue to govern the
sourcing of interest expense, it is anticipated that the Treasury Department will “continue to revise
existing Treasury regulations and propose such other statutory changes as necessary to prevent
inappropriate decreases in the amount of interest expense that is allocated and apportioned to foreign-
source income.”33
Deferred interest expense would be deductible in a subsequent taxable year to the
extent that the amount of interest expense allocated and apportioned to stock of foreign subsidiaries in
such subsequent year is less than the annual limitation for that year, subject to Treasury regulations that
may modify the manner in which such deferred interest expenses may be deducted.34
The proposal
would be effective for taxable years beginning after December 31, 2014.
8. Foreign Tax Credit Pooling
Under current law, a domestic corporation that owns 10 percent or more of the voting stock of a foreign
corporation from which the domestic corporation receives a dividend may claim a deemed paid foreign
tax credit for a portion of the income taxes paid to foreign jurisdictions by such foreign corporation.35
The Green Book proposal would require a domestic corporation to determine its deemed paid foreign tax
credit by looking at the aggregate earnings and profits of all of the domestic corporation’s foreign
subsidiaries. The domestic corporation’s deemed paid foreign tax credit would then be limited to an
amount proportionate to the taxpayer’s pro rata share of the aggregate earnings and profits repatriated to
the United States in that year that are currently subject to U.S. tax. Under this proposal, foreign taxes
deferred in prior years would be creditable in a subsequent taxable year to the extent that the current year
deemed paid foreign taxes do not exceed the limitation for that year. The proposal would be effective for
taxable years beginning after December 31, 2014.
9. Proposals Relating to the Transfer of Intangible Property
Current law provides that if intangible property is transferred or licensed to a related person, the income
recognized by the transferor must be “commensurate with the income” derived by the transferee from the
intangible;36
similarly, if intangible property is transferred by a U.S. person to a foreign corporation in a
33
See Green Book, page 42.
34 The Green Book does not elaborate on how the amount of foreign income “deferred” would be
determined for this purpose or how the portion of total foreign source interest expense allocable to that deferred income, as opposed to currently taxed foreign source income, would be determined.
35 See generally Section 902 of the Code. This foreign tax credit is subject to certain limitations. See
generally Section 904 of the Code.
36 See Section 482 of the Code; Treas. Reg. § 1.482-4.
-16- Chairman Camp’s Discussion Draft of Tax Reform Act of 2014 and President Obama’s Fiscal Year 2015 Revenue Proposals March 25, 2014
transaction that would otherwise be tax-free under Section 351 or 361 of the Code, the transfer is
recharacterized as a sale of such property in exchange for a series of contingent payments
commensurate with the income derived by the transferee from the intangible.37
In addition, Section 482
of the Code authorizes the IRS Commissioner to “distribute, apportion, or allocate gross income,
deductions, credits, or allowances between or among such organizations, trades, or businesses.”
According to the Green Book, the “potential tax savings from transactions between related parties,
especially with regard to transfers of intangible assets to low-taxed affiliates, puts significant pressure on
the enforcement and effective application of transfer pricing rules.”38
This, together with frequent
controversies about the scope of intangible property subject to the two “commensurate with income”
rules, has led to “inappropriate avoidance of U.S. tax”39
and “significant erosion of the U.S. tax base.”40
The Green Book contains two proposals relating to transfers of intangible property by U.S. persons to
foreign persons.
a. Excess Returns Associated with Transfers of Intangibles Offshore
The first Green Book proposal would apply whenever a U.S. person transfers an intangible from the
United States to a related CFC. The proposal would expand the reach of the Subpart F anti-deferral
regime by treating as Subpart F income any “excess intangible income” attributable to the intangible if
such income is subject to a “low foreign effective tax rate.”41
Where the effective tax rate is 10 percent or
less, all excess income would be treated as Subpart F income. This treatment would phase out ratably
for effective tax rates of 10 to 15 percent. Excess intangible income would be defined as “the excess of
gross income from transactions connected with or benefitting from” the intangible, over the costs
(excluding interest and taxes) allocable to the income and increased by a percentage markup (emphasis
added).42
A “transfer” to a CFC for this purpose includes transfers by license, lease, sale, or any shared
risk or development agreement (including any cost sharing arrangement). This Subpart F income would
be a separate category of income for foreign tax credit limitation purposes.
37
See Section 367(d) of the Code (applying to intangible property as defined in Section 936(h)(3)(B) of the Code).
38 See Green Book, page 45.
39 See Green Book, page 47.
40 See Green Book, page 45.
41 The Green Book does not elaborate on how the “foreign effective tax rate” would be determined,
including whether it would be determined using “net income” as determined under the foreign tax rules or under the U.S. tax rules.
42 See Green Book, page 46.
-17- Chairman Camp’s Discussion Draft of Tax Reform Act of 2014 and President Obama’s Fiscal Year 2015 Revenue Proposals March 25, 2014
The proposal would apply to any “transaction” by the CFC connected with or benefitting from the
intangible occurring in taxable years beginning on or after January 1, 2015, even if the intangible
“transfer” took place prior to 2015.
b. Limiting the Shifting of Income through Intangible Property Transfers
The second Green Book proposal would “clarify” that the definition of intangible property for purposes of
Sections 367 and 482 of the Code includes “workforce in place, goodwill, and going concern value, and
any other item owned or controlled by a taxpayer that is not a tangible or financial asset and that has
substantial value independent of the services of any individual.” Consequently, transfers of such items
would be subject to the two “commensurate with income” rules referred to above. The proposal would
also clarify that (i) when multiple intangibles are transferred, or where intangible property is transferred
with other property or services, the IRS Commissioner may value such properties or services on an
aggregate basis if that achieves a more reliable result, and (ii) the IRS may value intangible property
“taking into consideration the prices or profits that the controlled taxpayer could have realized by choosing
a realistic alternative to the controlled transaction undertaken.”43
The proposal would be effective for
taxable years beginning after December 31, 2014.
10. Modify the Foreign Tax Credit Rules for Dual Capacity Taxpayers
Under current law, special foreign tax credit rules apply to taxpayers who pay a levy to a foreign
jurisdiction and receive a specific economic benefit, such as the right to extract petroleum or other
minerals in exchange for payment of the levy (such a taxpayer, a “dual capacity taxpayer”). When a
foreign levy applies differently to dual capacity taxpayers as opposed to other taxpayers (other than as
the result of a lower rate being applied to dual capacity taxpayers), such levy is treated as a creditable
foreign income tax only to the extent established by the taxpayer to be a tax (i.e., not an amount paid in
exchange for the specific economic benefit). A dual capacity taxpayer may meet this burden of
establishing what portion of the levy is a tax under either: (i) the facts and circumstances test (i.e., the
taxpayer must show based on the facts and circumstances that the amount was not paid as
compensation for the specific economic benefit; or (ii) the safe harbor test (a formula that derives the
amount of the levy that may qualify as a tax).44
The Green Book asserts that the current law “fails to achieve the appropriate split” that should exist
between a payment of creditable taxes and a payment in exchange for a specific economic benefit in
certain cases.45
43
See Green Book, page 47.
44 See Treas. Reg. § 1.901-2A.
45 See Green Book, page 51.
-18- Chairman Camp’s Discussion Draft of Tax Reform Act of 2014 and President Obama’s Fiscal Year 2015 Revenue Proposals March 25, 2014
The Green Book proposal would replace the current regulatory provisions and instead permit a dual
capacity taxpayer to treat as a creditable tax the portion of the foreign levy that does not exceed the
foreign tax that would be due if the taxpayer were not a dual capacity taxpayer. This aspect of the
proposal would defer to U.S. treaty obligations to the extent that they explicitly allow a credit for taxes
paid or accrued on certain oil or gas income and would be effective for amounts that, if such amounts
were an amount of tax paid or accrued, would be considered paid or accrued in taxable years beginning
after December 31, 2014. For taxable years beginning after December 31, 2014, this Green Book
proposal would also convert foreign oil and gas income credit limitation rules into a separate foreign tax
credit limitation basket.
11. Tax Gain from the Sale of a Partnership Interest on a Look-Through Basis
In general, capital gain of a nonresident alien individual or foreign corporation from the sale or exchange
of property, including a partnership interest, is subject to U.S. federal income tax only if such gain is
treated as income that is effectively connected with the conduct of a U.S. trade or business (“ECI”). In
Revenue Ruling 91-32, the IRS held that a foreign partner’s gain or loss from the sale or exchange of a
partnership interest should be treated as ECI to the extent of such foreign partner’s share of unrealized
partnership gain or loss attributable to property used or held for use in the partnership’s U.S. trade or
business. The holding in IRS Revenue Ruling 91-32 has not been codified.
According to the Green Book, notwithstanding IRS Revenue Ruling 91-32, foreign taxpayers might take
the position that gain from the sale of a partnership interest is not subject to U.S. federal income tax
because there is no Code provision explicitly providing that gain from the sale or exchange of a
partnership interest by a nonresident alien individual or foreign corporation is treated as ECI.46
If this
position is taken and the partnership has in effect an election under Section 754 of the Code to adjust the
basis of its assets upon the transfer of an interest in the partnership, then such gain may escape
U.S. federal income tax altogether.
The Green Book proposal would codify Revenue Ruling 91-32. The Secretary would be granted authority
to specify the extent to which a distribution from a partnership is treated as a sale or exchange of an
interest in the partnership and to coordinate the new provision with the nonrecognition provisions of the
Code. Additionally, the proposal would require the transferee of a partnership interest to withhold
10 percent of the amount realized on a sale or exchange of the partnership interest unless the transferor
certified that the transferor was not a nonresident alien individual or foreign corporation (if the transferor
provided an IRS certificate establishing that its U.S. federal income tax liability with respect to the transfer
was less than 10 percent of the amount realized, the transferee would withhold the lesser amount). The
partnership would be liable for any underwithholding by the transferee with respect to the transfer and
46
See Green Book, page 53.
-19- Chairman Camp’s Discussion Draft of Tax Reform Act of 2014 and President Obama’s Fiscal Year 2015 Revenue Proposals March 25, 2014
would be required to satisfy the withholding obligation by withholding on future distributions to the
transferee partner. The proposal would be effective for sales or exchanges after December 31, 2014.
12. Prevent Use of Leveraged Distributions from Related Corporations
A distribution of property from a corporation to a shareholder is treated first as a dividend to the extent of
the distributing corporation’s earnings and profits and then the excess amount, if any, is treated as a
reduction in the shareholder’s adjusted basis in its stock of the distributing corporation.47
Any amount of
the distribution in excess of both earnings and profits and the shareholder’s basis is treated by the
shareholder as gain from the sale or exchange of property.48
There is no provision under current law that
limits a foreign corporation from funding a distribution (the “funding corporation”) made by a related
foreign corporation that does not have earnings and profits (the “distributing corporation”). In such a
case, the distribution would not be treated as a dividend and, if the distributee shareholder has sufficient
basis in the foreign distributing corporation, the distributee would not be subject to U.S. federal income
tax on the distribution. Similarly, the earnings and profits of a domestic corporation can also be distributed
in such a manner to a shareholder that has sufficient tax basis in the distributing corporation.
To prevent this result, the Green Book proposal would disregard a U.S. shareholder’s basis in the stock of
the distributing corporation in cases where a funding corporation funds a related distributing corporation’s
distribution with the principal purpose of avoiding dividend treatment. For this purpose, the funding
corporation and the distributing corporation would be treated as related if they are members of the same
“controlled group” within the meaning of Section 1563(a) of the Code, but replacing references to “at least
80 percent” with “more than 50 percent.”49
Additionally, the proposal would apply whether the funding
transaction between the funding corporation and the distributing corporation “occurs before or after the
distribution.”50
The proposal would be effective for distributions made after December 31, 2014.
13. Extend Section 338(h)(16) to Certain Asset Acquisitions
Under Section 338 of the Code, an election may be made to treat certain qualified stock purchases as
asset acquisitions (a “Section 338 election”), resulting in a stepped-up basis of the target corporation’s
assets. Under Section 338(h)(16) of the Code, however, “the deemed asset sale resulting from a
Section 338 election is not treated as occurring for purposes of determining the source or character” of
47
See Section 301(c) of the Code.
48 See id.
49 Under Section 1563(a) of the Code, a controlled group exists if the members of the group are at least
80 percent owned by other members of the group and the common parent owns at least 80 percent of at least one of the member corporations.
50 See Green Book, page 55.
-20- Chairman Camp’s Discussion Draft of Tax Reform Act of 2014 and President Obama’s Fiscal Year 2015 Revenue Proposals March 25, 2014
the income when applying the foreign tax credit rules. This “prevents a seller from increasing allowable
foreign tax credits as a result of a Section 338 election.”51
Section 901(m) of the Code denies foreign tax credits with respect to foreign income that is not subject to
U.S. taxation by reason of an acquisition of assets that have a higher tax basis for U.S. tax purposes than
for foreign tax purposes (such acquisitions, “Covered Asset Acquisitions” or “CAAs”). A transaction in
which a Section 338 election is made is one such CAA to which Section 901(m) applies.
The Green Book explains that other types of CAAs subject to the credit disallowance rule under
Section 901(m) “present the same foreign tax credit concerns as those addressed by Section 338(h)(16)”
but do not have a similar limit on the ability of a seller to increase allowable foreign tax credits by entering
into a transaction that is treated as an asset acquisition for U.S. tax purposes but as a stock acquisition
for foreign tax purposes. The Green Book proposal would impose such limits by extending the
application of Section 338(h)(16) to any CAA to which Section 901(m) applies.52
The proposal would
apply to CAAs occurring after December 31, 2014.
14. Remove Foreign Taxes from a Section 902 Corporation’s Foreign Tax Pool When Earnings Are Eliminated
Under current law, a domestic corporation which owns 10 percent or more of the voting stock of a foreign
corporation from which it receives dividends (or an income inclusion under Subpart F that is treated as a
deemed dividend) is generally deemed to have paid the same proportion of such foreign corporation's
foreign income taxes as the amount of such dividends (or deemed dividends) bears to such foreign
corporation’s undistributed earnings and profits.53
Following such a dividend (or deemed dividend), the
earnings and profits and the associated foreign taxes paid are reduced. In addition, Treasury regulations
under Section 367(b) of the Code provide rules for the allocation of earnings and profits and foreign taxes
of a foreign corporation in transactions described under Section 381 of the Code (generally providing that
earnings and profits and other tax attributes of a target corporation carry over to an acquiring corporation
in a tax-free restructuring transaction). However, certain other transactions eliminate a foreign
corporation’s earnings and profits without a corresponding reduction in the associated foreign taxes paid
(e.g., the Green Book cites a partial redemption of corporate stock54
and a tax-free distribution under
Section 355 of the Code).55
51
See Green Book, page 56.
52 See id.
53 See Section 902 of the Code.
54 See Section 312(n)(7) of the Code.
55 See Section 312(h) of the Code.
-21- Chairman Camp’s Discussion Draft of Tax Reform Act of 2014 and President Obama’s Fiscal Year 2015 Revenue Proposals March 25, 2014
The Green Book argues that the reduction, allocation, or elimination of earnings and profits for certain
transactions, without a corresponding reduction in the associated foreign taxes paid, would result in a
corporate shareholder claiming a credit for foreign taxes paid with respect to earnings that will no longer
fund a dividend distribution.56
The Green Book proposal would reduce the amount of foreign taxes paid
by a foreign corporation in the event a transaction results in the reduction, allocation, or elimination of a
foreign corporation’s earnings and profits, other than a reduction of earnings and profits by reason of a
dividend or by reason of a Section 381 of the Code transaction. The amount of foreign taxes that would
be reduced in such a transaction would equal the amount of foreign taxes associated with such earnings
and profits. The proposal would be effective for transactions occurring after December 31, 2014.
* * *
56
Green Book, page 57.
Copyright © Sullivan & Cromwell LLP 2014
-22- Chairman Camp’s Discussion Draft of Tax Reform Act of 2014 and President Obama’s Fiscal Year 2015 Revenue Proposals March 25, 2014 SC1:3614777v1
ABOUT SULLIVAN & CROMWELL LLP
Sullivan & Cromwell LLP is a global law firm that advises on major domestic and cross-border M&A,
finance, corporate and real estate transactions, significant litigation and corporate investigations, and
complex restructuring, regulatory, tax and estate planning matters. Founded in 1879, Sullivan &
Cromwell LLP has more than 800 lawyers on four continents, with four offices in the United States,
including its headquarters in New York, three offices in Europe, two in Australia and three in Asia.
CONTACTING SULLIVAN & CROMWELL LLP
This publication is provided by Sullivan & Cromwell LLP as a service to clients and colleagues. The
information contained in this publication should not be construed as legal advice. Questions regarding
the matters discussed in this publication may be directed to any of our lawyers listed below, or to any
other Sullivan & Cromwell LLP lawyer with whom you have consulted in the past on similar matters. If
you have not received this publication directly from us, you may obtain a copy of any past or future
related publications from Stefanie S. Trilling (+1-212-558-4572; [email protected]) in our New York
office.
CONTACTS
New York
Andrew S. Mason +1-212-558-3759 [email protected]
Andrew P. Solomon +1 212 558 3783 [email protected]
Theodore D. Holt +1-212-558-4354 [email protected]
Washington, D.C.
Donald L. Korb +1-202-956-7675 [email protected]
London
S. Eric Wang +44-20-7959-8411 [email protected]