US issues final regulations on hybrid arrangements, dual consolidated losses

On April 8, 2020, the US Internal Revenue Service issued a document containing final regulations providing guidance on hybrid dividends and dual consolidated losses.

The guidance deals with certain amounts paid or accrued pursuant to hybrid arrangements, which generally involve arrangements whereby US and foreign tax law classify a transaction or entity differently for tax purposes.

The document contains final regulations relating to dual consolidated losses and entity classifications to prevent the same deduction from being claimed under the tax laws of both the US and a foreign jurisdiction.

Finally, the document contains final regulations regarding information reporting to facilitate the administration of certain rules in the final regulations. The final regulations affect taxpayers that would otherwise claim a deduction related to such amounts and certain shareholders of foreign corporations that pay or receive hybrid dividends.
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The regulations are effective from April 8, 2020.

See Regulations