Stock Buyback Tax ‘Funding Rule’ Changes Still Deemed Too Vague

A slight change within the long-awaited stock buyback excise tax proposed regulations the IRS released this week narrowed the scope of the controversial “funding rule” but it remains too broad for companies on the hook to pay the tax.

The Treasury Department’s proposals detail how companies calculate and pay the 1% excise tax on corporate stock repurchases. The proposals narrow the so-called funding rule outlined in the initial notice, which made certain foreign corporations’ stock buybacks subject to the tax if they had received funding from their US subsidiaries. The proposed regulations keep the funding rule but changed the “per ...