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R&E regs finalized. Final regulations (TD 8562) have been issued that define the term "research and experimental expenditures" for purposes of the deduction under Section 174. The regs also give the "requisite uncertainty" test requirements, which are more liberal than the requirements in the proposed regs. Changes apply to taxable years beginning after Oct. 3, 1994.
Attack on corporate inversion transactions. In Notice 94-93, the IRS announced that guidance will be issued on corporate inversion transactions. An "inversion transaction" is any transaction that inverts or reverses the positions of related corporations. Guidance is expected to include regs that might require recognition of income or gain at the time of the inversion transaction or reductions to the basis (or increases in the gain on the sale or other disposition) of the stock of one or more corporations that are involved in an inversion transaction.
The regs will apply to an inversion transaction occurring on or after Sept. 22, 1994, in which, as a result of an issuance or transfer of stock or stock rights, there would be a reduction in the amount a third party would...