IRS Scraps ‘Funding Rule’ in Stock-Buyback Tax Regulations (2)

The IRS withdrew a controversial portion of its regulations on the stock-buyback tax, a move many business advocates and tax-world observers had argued for.

The agency Friday issued final rules (TD 10037; RIN 1545-BQ59) on the 1% excise tax on companies’ stock repurchases that indicated it wouldn’t adopt the “funding rule.” That rule, part of the regulations the IRS had proposed in April 2024, would have imposed the tax on foreign companies’ stock repurchases if they were deemed to be indirectly funded by the companies’ US subsidiaries in an attempt to avoid the tax.

Business groups have complained ...