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Michael Grace Discusses New Rules Taxing Property Transfers to Overseas Partnerships

Bloomberg BNA's Daily Tax Report  
January 19, 2017

Michael J. Grace, consulting counsel in Wiley Rein’s Corporate Practice, was quoted in a January 19 Bloomberg BNA story reporting on new tax regulations aimed at preventing partnerships from transferring assets, including intellectual property, to overseas partners to avoid U.S. tax. The regulations include de minimis exceptions enabling smaller partnerships to avoid spending money to comply with the rules, according to Mr. Grace.

The new regulations, which follow through on IRS Notice 2015-54, issued in 2015, generally apply retroactively to August 6, 2015, as the Notice had warned. However, some aspects of the new regulations do not apply until January 18, 2017. “The new regulations defer the effective date of rules that could not reasonably have been anticipated based on reading the notice,” Mr. Grace said. “I think that was very thoughtful and fair of them to do that.”

“I’ve seen increasingly over the years that with new rules you have to pay as much attention to the effective date as to the substance of the rules,” Mr. Grace added. “This situation exemplifies that process.”