CCA SAYS NONE OF TAXPAYER'S CFC LOANS SATISFY NOTICE 88-108 UNLESS ALL DO

The IRS Chief Counsel's Office issued CCA 201516064 on Apr 17, 2015, addressing the application of Notice 88-108, 1988-2 CB 445, in which a controlled foreign corporation (CFC) made loans back to its US parent over two quarter-ends, both of which were repaid within 30 days, but also made a thir...

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Bibliographic Details
Published in:Journal of International Taxation 2015-07, Vol.26 (7), p.17
Main Authors: Harter, Chip, Collins, Marty, Fischl, Alan, DiFronzo, Michael, Dubert, Carl, Rosenberg, Rebecca, Markham, Charles
Format: Article
Language:English
Subjects:
Calendars
Controlled foreign corporations
International taxation
Loan agreements
Loans
Parent companies
Qualifications
Requirements
Stockholders
Taxpayers
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Summary:The IRS Chief Counsel's Office issued CCA 201516064 on Apr 17, 2015, addressing the application of Notice 88-108, 1988-2 CB 445, in which a controlled foreign corporation (CFC) made loans back to its US parent over two quarter-ends, both of which were repaid within 30 days, but also made a third loan that caused the CFC to be a creditor of the US parent for more than 59 days during the year. The CCA highlights that the test under the Notice is an "all-or-nothing" test. CCA 201516064 said that Notice 88-108 is intended to apply in fact patterns in which CFC earnings are available for use in the US only for a small port ion of the year. Satisfying the requirements of Notice 88-108 can be operationally challenging. Taxpayers will need to monitor their accounts very carefully to ensure that they do not inadvertently disqualify loans intended to meet those requirements.
ISSN:1049-6378