Canada: OECD’s BEPS Recommendations: Sweeping Treaty Shopping Rules May Impact Private Equity, Hedge Fund And Collective Investment Vehicles

On September 16, the OECD released its first Base Erosion and Profit Shifting (BEPS) recommendations to the OECD and G20 countries to combat tax avoidance by multinational enterprises (MNEs). The Explanatory Statement and related release included the first set of reports and recommendations to address seven of the action items in the BEPS plan, first announced in 2013. This bulletin focuses on the potential impact of one of the recommendations on private equity investments, […]

By |September 29th, 2014|

United States: IRS Rules That A Pharmaceutical Company Is A Qualified Trade Or Business For Purposes Of Section 1202

In a private letter ruling, PLR 201436001, the IRS ruled that a corporation (Company) that provides products and services to the pharmaceutical industry was engaged in a qualified trade or business for purposes of Section 1202.

As such, a shareholder (Taxpayer) of Company could exclude 50% of the gain that Taxpayer incurred on the sale of Company stock under Section 1202. The gain exclusion under Section 1202 is 75% for stock acquired between Feb. 18, […]

By |September 26th, 2014|

United States: Partners And Partnership Had No Basis In Contributed, Unsecured Notes, Tax Court Holds

In VisionMonitor Software LLC v. Commissioner, T.C. Memo 2014-182 (Sept. 3, 2014), the Tax Court held that both the partners and the partnership had zero tax basis in personal promissory notes contributed to the partnership because the notes were “only a contractual obligation” and not equal to a cash contribution.

The partnership was formed in 2002 by two individuals and a corporation with the funds to keep the business afloat. When the partnership needed additional […]

By |September 26th, 2014|