IRS Proposed Regulations Significantly Limit the Applicability of Section 956 Income Inclusions
On October 31, 2018, the IRS issued proposed regulations (the “Proposed Regulations”) that generally will allow U.S. corporations that are U.S. shareholders of controlled foreign corporations (“CFCs”) to avoid the impact of Section 956 of the U.S. Internal Revenue Code of 1986 (the “Code”). This change may result in CFCs being able to provide credit support to U.S. borrowers without the adverse U.S. tax consequences which have historically applied.