Ins and Outs of the New Proposed Regulations on the Stock Buyback Tax
Author: Davis J. Wang.; S. Eric Wang.; Jameson S. Lloyd.; Alexei L. Owen.
Source: Volume 41, Number 03, Spring 2024 , pp.51-62(12)
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Abstract:
This article reviews the recently issued Proposed Regulations on the application of the stock repurchase tax in Internal Revenue Code Section 4501. The Proposed Regulations address repurchases of foreign corporate stock “funded” by a domestic entity, repurchases of preferred stock, exemptions for redemptions in a complete liquidation, and application to M&A transactions.Keywords: IRC Sec. 4501, buyback, excise tax, funding rule, redemptions of preferred stock, liquidations, tax-free reorganizations, foreign corporate stock, M&A transactions, leveraged buyouts, SPACs, accelerated share repurchase
Affiliations:
1: Sullivan & Cromwell LLP; 2: Sullivan & Cromwell LLP; 3: Sullivan & Cromwell LLP; 4: Sullivan & Cromwell LLP.