Daily Tax Update - May 10, 2013: Treasury and IRS Issue Final Section 336(e) Regulations

THE DAILY TAX UPDATE WILL BE PUBLISHED ON A PERIODIC BASIS UNTIL CONGRESS RETURNS MAY 14

TREASURY AND IRS ISSUE FINAL SECTION 336(e) REGULATIONS:  Today, Treasury and the IRS issued final regulations under section 336(e).  Section 336(e) authorizes the issuance of regulations that permit an election to treat the sale, exchange, or distribution of at least 80 percent of the vote and value of the stock of a target corporation as a sale of its underlying assets.  Section 336(e) was enacted in 1986 as part of General Utilities repeal to provide relief from double taxation.  However, section 336(e) is not self-executing, and no election was available until the issuance of final regulations.  The regulations issued today finalize proposed regulations issued in 2008, with certain modifications, and provide the terms and conditions for making a section 336(e) election and its consequences.  The election available under section 336(e) supplements the election provided in section 338(h)(10).  However, unlike a section 338(h)(10) election, which requires a corporate purchaser, a section 336(e) election is permitted even if the sale, exchange, or distribution involves a non-corporate acquirer.

The regulations can be accessed via:

2013-11522_PI (2).pdf