What is a section 367 transfer?

Code Sec. 367(a) and (d) subject to taxation a transfer of tangible and intangible property by a U.S. person to a foreign corporation in an otherwise tax-free transaction. 367(a)(1) provides generally that gain realized on the transfer of property by a U.S. person to a foreign corporation is subject to taxation.

What is IRC section 367?

IRC §367 generally requires either current gain recognition, or requires the parties to the transaction to enter into a Gain Recognition Agreement (GRA) to avoid current recognition of the gain in question. Prior to 1983, California did not conform to IRC §367.

When was IRC 367 enacted?

In the case of any exchange described in section 367 of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] (as in effect on December 31, 1974) in any taxable year beginning after December 31, 1962, and before the date of the enactment of this Act [Oct.

What is a 367 gain?

The general purpose of IRC 367(a)(1) is to tax the built-in gain on appreciated property that is transferred in an outbound transaction. Specifically, IRC 367(a)(1) imposes taxation on the outbound transfer of property by a U.S. person to a FC in what would otherwise be a nontaxable exchange.

What is gain recognition agreement?

A GRA is an agreement pursuant to which a US transferor agrees to recognize gain if the transferee foreign corporation disposes of the transferred stock or securities during the term of the GRA and to pay interest on any additional tax owing if a so-called “triggering event” occurs.

What is a new gain recognition agreement?

What is a Type D reorganization?

A Type D reorganization involves a transfer of assets between corporations. However, the most common uses of D reorganizations involve the splitting of one corporation into two or more corporations in transactions commonly described as split-ups, split-offs, and spinoffs.