The IRS released guidance relating to transactions that the IRS believes some taxpayers may be using as a device for the distribution of earnings and profits, but that do not have an adequate business purposes.
An advance version of Notice 2015-59 states that the IRS is studying issues under sections 337(d) and 355 relating to certain distributions, in which property becomes the property of a regulated investment company (RIC) or a real estate investment trust (REIT), and in which the active business is small relative to other assets, or in which there is a substantial amount of investment assets. The IRS notice describes the transactions and requests comments concerning those transactions.
An advance version of Rev. Proc. 2015-43 provide new “no-rule areas”—topics on which the IRS will not ordinarily issue letter rulings or determination letters. Specifically, the IRS is adding two new “no-rule” paragraphs to the annual “no-rule” revenue procedure—Rev. Proc. 2015-3. Both new “no-rule” provisions related to certain distributions in which property becomes the property of a RIC or REIT in which the active business is small relative to other assets, or in which there is a substantial amount of investment assets.
Notice 2015-59 [PDF 173 KB] states that the IRS and Treasury Department are studying issues under sections 337(d) and 355 relating to transactions having one or more of the following characteristics:
Comments are requested concerning whether these transactions are to be treated differently from other transactions, and whether other classes of transactions should be subject to similar exceptions.
Rev. Proc. 2015-43 [PDF 162 KB] adds two types of these transactions to the list of no-rule areas.
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