Internal Revenue Bulletin: 2016-18
May 2, 2016
While current law is clear that changes in conversion ratios in convertible instruments may result in deemed distributions under section 305, ambiguities exist whether the deemed distribution is of shares of stock or rights to acquire stock, and concerning the amount and timing of these deemed distributions. These proposed regulations clarify that the deemed distribution is of rights to acquire stock, and the amount and timing of the deemed distribution. Guidance is also provided to withholding agents regarding their withholding obligations under sections 860G, 861, 1441, 1461, 1471, and 1473 , as well as information reporting guidance for such deemed distributions under section 6045B.
This document contains proposed regulations that address transactions that are structured to avoid the purposes of sections 7874 and 367 of the Internal Revenue Code (the Code) and certain post-inversion tax avoidance transactions. These regulations affect certain domestic corporations and domestic partnerships whose assets are directly or indirectly acquired by a foreign corporation and certain persons related to such domestic corporations and domestic partnerships. The regulations are issued by cross-reference to temporary regulations in TD 9761.
This revenue procedure provides indexing adjustments for certain provisions under sections 36B and 5000A of the Internal Revenue Code. In particular, it updates the Applicable Percentage Table in § 36B(b)(3)(A)(i) to provide the Applicable Percentage Table for 2017 that is used to calculate an individual’s premium tax credit. This revenue procedure also updates the required contribution percentage in § 36B(c)(2)(C)(i)(II) for plan years beginning after calendar year 2016. The percentage is used to determine whether an individual is eligible for affordable employer-sponsored minimum essential coverage under § 36B. Additionally, this revenue procedure cross-references the required contribution percentage under § 5000A(e)(1)(A) for plan years beginning after calendar year 2016, as determined under guidance issued by the Department of Health and Human Services. The percentage is used to determine whether an individual is eligible for an exemption from the individual shared responsibility payment because of a lack of affordable minimum essential coverage.
The Notice provides that the Service has designated, under I.R.C. section 7502(f), eight new delivery services as designated Private Delivery Services that qualify for the timely mailing treated as timely filing/paying rule of section 7502.
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