Summary of Proposed Regulations to Section 367(b)

The IRS has released proposed regulations regarding Section 367(b) transactions, commonly referred to as 'killer B' structures. These regulations aim to provide guidance and clarity on the tax treatment of these transactions. While the release of proposed regulations seems late, as the relevance of killer B transactions has decreased in recent years, it may be related to ongoing litigation around past cases. The proposed regulations address issues such as the exclusion of other comprehensive income from the corporate alternative minimum tax (AMT) base and the treatment of restatements of financial statements. However, these regulations do not substantively cover three critical issues: double counting of CFC distributions, the treatment of partnerships and the meaning of 'distributive share.' The IRS has acknowledged that these unresolved issues are on their radar and that guidance will be provided in the future.