IRS LB&I Active Campaigns: Financial Service Entities Engaged in U.S. Trade or Business (IRC §864)

Active campaign related to whether foreign investors were subject to U.S. tax on effectively connected income from lending transactions engaged in through a U.S. trade or business, released June 10. Tax code Section 864(b)(2) provides a safe harbor for foreign investors only trading in stocks and securities for their own account as not being engaged in a U.S. trade or business, the IRS stated. However, the safe harbor is not available to dealers in stocks or securities, including entities engaged in a lending business, or to foreign investors in partnerships engaged in such activities, the IRS continued. [LB&I Active Campaign: ...