The ABA Tax Section offers a teleconference and webcast today on Origination and Restructuring Activity Consequences Under Section 864(b) from 1:00 – 2:30 p.m. EST:
Section 864(b)(2) provides a safe harbor under which foreign corporations that limit their activities to trading in stocks and securities (and derivatives) are not subject to U.S. federal income tax, even if they have a U.S. manager with investment discretion. Foreign hedge funds and other foreign investment vehicles (including the foreign blockers of domestic hedge funds) rely on this safe harbor to avoid U.S. corporate income tax.
However, practitioners are concerned that "origination" activity may not be protected by the safe harbor and foreign hedge funds (or foreign blockers) that engage in origination activity may be subject to U.S. corporate income tax. More recently, in the economic downturn, practitioners have been concerned that certain workout activity may be treated as giving rise to a deemed origination that could also cause a foreign hedge fund (or foreign blocker) to be subject to U.S. corporate income tax.
Please join our panelists as they discuss the guidelines (and variations in the guidelines) that hedge funds and other offshore vehicles follow to avoid being treated as engaged in origination activity, and the guidelines and structures that funds use to avoid being treated as engaged in origination activity by reason of workouts.
Speakers:
- David S. Miller (Cadwalader, Wickersham & Taft, New York)
- Shlomo Boehm (Cadwalader, Wickersham & Taft, New York)
