US: Accounts receivable not creating related-party indebtedness

US: Accounts receivable not related-party indebtedness

The U.S. Court of Appeals for the Fifth Circuit reversed a 2013 decision of the U.S. Tax Court, and held that because neither section 965 nor a closing agreement under Rev. Proc. 99-32 treated an accounts receivable as indebtedness (and thus not increased related-party indebtedness for purposes of the related-party debt rule under section 965(b)(3)), the taxpayer did not agree to treat the accounts receivable created by the repatriated-dividends tax deduction as indebtedness.

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The case is: BMC Software Inc. v. Commissioner, No. 13-60684 (5th Cir. March 13, 2015)

Read the Fifth Circuit decision [PDF 144 KB]

 

Read a September 2013 report [PDF 75 KB] prepared by KPMG LLP and discussing the Tax Court’s 2013 decision.

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