KPMG report: Proposed section 367(d) regulations addressing certain intangible property repatriations
Analysis and observations
Analysis and observations
The U.S. Treasury Department and IRS on May 2, 2023, released proposed regulations [PDF 273 KB] (REG-124064-19) that would terminate the application of section 367(d) arising from an outbound transfer of intangible property described in section 367(d)(4) (“offshored IP”) when such IP is subsequently repatriated to certain U.S. persons. By terminating the application of section 367(d) upon the repatriation of offshored IP, the proposed regulations alleviate the excessive taxation that can result under current law. As expected, the proposed regulations are narrow in scope and do not address many long-standing questions regarding the operation of section 367(d).
The proposed regulations are proposed to apply prospectively for repatriations of offshored IP occurring on or after the date of publication of the final regulations. As a result, if Treasury and the IRS retain this applicability date in the final regulations, repatriations of offshored IP prior to finalization would be ineligible for the relief afforded by the proposed regulations. Therefore, taxpayers that would like to repatriate offshored IP before the proposed regulations are finalized, need to consider obtaining a private letter ruling from the IRS regarding the application of section 367(d) to the offshored IP after repatriation.
Read a May 2023 report [PDF 510 KB] prepared by KPMG LLP that provides analysis and observations of the proposed regulations.
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