The US Tax Cuts and Jobs Act of 2017 added new sections 245A(e) and 267A to the Code. Section 245A(e) denies the section 245A dividends-received deduction for “hybrid” dividends. Section 267A concerns payments on hybrid instruments and payments by, or to, a hybrid entity, providing that no deduction is allowed for any amount (i) paid or accrued pursuant to a “hybrid” transaction or (ii) paid by, or to, a “hybrid” entity. On December 20, 2018, the Internal Revenue Service issued proposed regulations under both of these Code provisions. This Legal Update provides an overview of the proposed regulations.
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