Law Firm Says Part of IRS Killer B Rule Is Unfairly Retroactive

A proposed IRS regulation aimed at reining in “Killer B” triangular reorganizations would unfairly apply an anti-abuse rule retroactively, and it should be changed, law firm Mayer Brown says.

The proposed regulation (REG-117614-14, RIN 1545-BM19) under Section 367(b) would in part formalize a 2014 IRS notice. But the regulation includes two examples that indicate the IRS intends to retroactively apply the anti-abuse rule in a way that wasn’t contemplated in the 2014 notice, back to existing regulations from 2011, Mayer Brown said in a Dec.1 comment letter released Wednesday.

• The IRS should either eliminate those examples from ...