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TCH Comments on Revisions to Internal Revenue Code Section 367

The Clearing House (TCH) submitted a comment letter on proposed Treasury regulations under Section 367 of the Internal Revenue Code which would, in a significant departure from existing law, tax certain outbound transfers of foreign goodwill and going concern value in otherwise tax-free transactions. BHCs and their affiliates seeking to conduct business in subsidiary rather than branch form may require an outbound transfer (or transfers) of foreign goodwill and going concern that would now result in adverse U.S. tax consequences under Section 367. The comment letter argues that the final revisions should include an exception for outbound transfers of foreign goodwill and going concern value by BHCs and their affiliates (an exception that is mentioned in the preamble of the Proposal) and that such an exception has limited potential for abuse given the significant regulation to which such BHCs and their affiliates are already subject.