Ernst & Young ITTS Washington Dispatch

Tax reform and corporate integration dominate discussions in lead up to House tax reform blueprint – Comprehensive derivatives taxation draft released -- Congressional Republicans voice concern over Proposed Section 385 debt/equity regulations – US Treasury moving forward with optional CbC reporting in 2016 -- US proposed rules would require reporting by foreign-owned US disregarded entities -- ABA Tax Section meeting highlights proposed Section 385 and Section 305(c) regulations, US Model Treaty -- Six more countries sign tax cooperation agreement enabling automatic exchange of CbC reports.

Uncertainty regarding House international tax reform draft – Comprehensive tax reform blueprint expected by end of June – New Section 385 regulations would treat related-party corporate interests as stock, not debt -- Treasury releases new anti-corporate inversion regulations modifying application of Section 7874, limiting post-inversion tax benefits – US moving toward optional CbC reporting for 2016 – IRS issues proposed regulations under Section 305(c) deemed distributions and related withholding – Future proposed regulations will treat foreign-owned single-member LLCs as corporations for Section 6038A reporting purposes – IRS Associate Chief Counsel (International) lists top guidance priorities.

US international tax reform remains major issue on Capitol Hill – IRS final outbound asset reorganization rules adopt repeal of Section 367(a)(5) exception – Proposed regulations to treat foreign-owned single-member LLCs as corporations for 6038A reporting coming soon – IRS removes Cuba from list of countries for which FTCs, CFC deferral disallowed – Treasury to release US CbC reporting regs by 30 June, official says – IRS issues 2015 APA report.

US international tax reform takes on added urgency in Congress – Obama Administration's FY 2017 Budget includes international provisions substantially similar to FY 2016 proposals – Treasury releases 2016 US Model Income Tax Treaty – US Treasury official comments on EU State aid investigations -- IRS amends regulations allocating partnership foreign tax expense – FIRPTA regulations amended to reflect Path Act -- IRS files appeal in Altera Corp. v. Commissioner – IRS names new Associate Chief Counsel (international).

House Ways and Means Committee to mark-up international tax reform bill in 2016 – Senate Finance Committee leaders express concern over EU State aid investigations – President Obama delivers State of the Union address – US legislation has implications for certain foreign pension funds –IRS Notice 2016-10 offers guidance for RICs with Section 853 elections alternative methods for handling foreign tax refunds – Treasury is considering foreign goodwill exception in final Section 367 regulations – Sixth Circuit holds FX option is Section 1256 contract, reverses Tax Court.

Congress makes permanent certain international tax extender provisions in major tax legislation – House, Senate committees hold hearings on BEPS, EU state aid and inversions – US issues proposed CbC reporting regulations – US international tax guidance on the horizon – Treasury grants yet another FBAR extension – IRS announces Section 4371(3) excise tax will not apply to foreign-to-foreign reinsurers.

Congressional leaders, Obama Administration negotiating tax extenders package -- Pending Treasury regulations will expand scope of Section 7874, limit benefits of certain post-inversion transactions -- Treasury considering narrowing eliminated exception for outbound transfers of foreign goodwill -- Delayed applicability date announced for aspect of Section 871(m) dividend equivalent payment regulations -- US Senate Foreign Relations Committee approves tax agreements; further Senate action uncertain.

W&M Committee Chairman Paul Ryan elected House Speaker – Senate Foreign Relations Committee holds hearing on 8 pending tax agreements – Accelerated deadline for FBAR filing for calendar year 2016 accounts – IRS delays new rule for loan treatment of nonperiodic payments on NPCs – More countries to exchange bank deposit interest info with US -- IRS to target inbound middle market companies for TP exams – US will accept bilateral Indian APA applications in January 2016 – US CbC reporting regs to be released in 2015 -- OECD issues final BEPS reports

Congress returns to pending deadlines; Speaker Boehner resigns – IRS issues regulations under Subpart F – IRS releases final regulations on integrated hedging transactions – IRS issues long-awaited final regulations addressing "F" reorganizations – IRS proposed regulations would subject outbound transfers of foreign goodwill or going concern value to tax under Section 367(a) or (d) – IRS releases temporary regulations under Section 482 on coordinating TP rules with other Code provisions – IRS issues final and temporary regulations on dividend equivalent amounts – IRS: Cash basis taxpayer may not elect accrual method for claiming FTCs on amended return – IRS extends certain FATCA transitional rules – US Appellate Court affirms special 10-year statute of limitations for refund claims attributable to FTCs runs from return due date – US District Court rules discretionary treaty benefits subject to judicial review.

Congress returns on 8 September to legislative, budgetary deadlines – Tax Court in Altera rules stock-based compensation costs not included in cost pool for QCSAs subject to 1995 cost-sharing regulations -- IRS Notice 2015-54 announces forthcoming regulations on partnership nonrecognition of property contributions -- IRS recharacterizes intercompany referral fee income, reallocates intercompany referral fee expenses -- IRS updates procedures for competent authority assistance -- IRS issues updated guidance on requesting and obtaining an APA -- IRS 2015-2016 Priority Guidance Plan contains new international tax projects – OECD issues report on implementing CbC standard.