IRS CCA: Anti-Abuse Rule Applicable to U.S. Parent’s Financings to Repatriate Money From CFCs (IRC §956)

Two controlled foreign corporations indirectly held, in the tax year at issue, U.S. Parent loans held by another CFC because that CFC, a foreign corporation controlled by the two CFCs, was funded with a principal purpose of avoiding the application of I.R.C. §956 with respect to the two CFCs, the Chief Counsel’s Office advised, applying the anti-abuse rule. U.S. Parent is a shareholder in multiple CFCs that have disregarded entities (DREs) in the corporate structure. U.S. Parent, in acquiring Company, entered into a series of financings to raise cash for the stock and cash purchase. After the acquisition closed, ...