IRC Section 385 Regulations: 5 Steps Companies Can Take Now

Companies should act now to prepare for the significant documentation changes that will be required by the proposed Section 385 regulations.

On April 4, 2016, the IRS and the U.S. Department of Treasury issued proposed regulations to address earnings stripping under Section 385 of the Internal Revenue Code that could go into effect in the coming months. With no advance indication of the depth and breadth of the proposed regulations under consideration, the Treasury’s announcement has caused tax, audit, and legal professionals to scramble to understand the potential ramifications.

Preparation is Key

While it’s difficult to move forward with certainty before the proposed regulations are finalized, there are several key steps companies can take now to prepare for the potential new world order. The following steps will provide a significant, positive impact in terms of efficiencies gained in the event of an IRS challenge, whether or not the new regulations are finalized.

  1. Develop a coordinated approach
  2. Review the current procedures
  3. Examine existing transactions
  4. Meet with the company’s tax counsel
  5. Consider engaging outside, independent resources

Companies should act now to prepare for the significant documentation changes that will be required by the proposed Section 385 regulations. Download our white paper to learn more about the far-reaching implications of the proposed regulations, the 5 steps you can take now to prepare, and for access to our documentation requirements checklist to help you manage the process.

Download the white paper now.