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Today the Treasury Department and the IRS issued guidance and a request for comment relating to a new information reporting provision with respect to taxable corporate acquisitions enacted as part of the American Jobs Creation Act of 2004.
Existing temporary regulations require corporations to report to both the IRS and their shareholders following a transaction in which there is an acquisition of control or a substantial change in capital structure and which may be taxable under the rules of Internal Revenue Code section 367(a). These temporary regulations require information reporting with respect to corporate inversion transactions. Proposed regulations would extend this information reporting to other corporate acquisitions and substantial changes in capital structure. The new provision added by the AJCA providing for information reporting by an acquiring corporation in a taxable transaction supplements existing information reporting rules.
The notice indicates that Treasury and the IRS continue to consider comments regarding the proposed regulations and are considering the proper implementation of the new information reporting provision. The notice requests public comments regarding the implementation of the new provision, including coordination of the new rules with the requirements of the existing regulations.
A copy of Notice 2005-7 is attached.
REPORTS