|April 2, 2014|
Previously published on April 1, 2014
Update: Dropping look-through lasted approximately 6 hours today. The extenders package released this morning would not have extended the related party look through rule as discussed in the original post, but by 4 PM, a two-year extension of the look-through provision was included on a list of provisions the Senate Finance Committee said may be added to the extenders package either before the mark up or as amendments.
Original Post: On April 1, Senate Finance Committee Chairman Ron Wyden (D-Ore.) released a Chairman’s mark of legislation which would extend tax provisions that had expired at the end of 2013. On the international tax side, this “extenders package” is notable for what it did not include.
Three international tax provisions had expired at the end of 2013:
the active finance exception (section 954(h),
the active insurance exception (section 954(i)) and
the related party look-through rule (section 954(c)(6).
The Chairman’s mark extended both the active finance and active insurance exceptions for two years, through 2015, but declined to extend the related party look-through rule. The failure of the Chairman’s mark to extend the look-through provision is in contrast to past practice¿the provision has previously sunset and been extended three times. Other recent tax proposals also extended the look-through provision. The comprehensive tax proposal from retiring Ways and Means Chairman Dave Camp (R-Mich.) would make the look-through provision permanent, while the revenue provisions in the President’s 2015 budget (aka “the Greenbook”) assume extension of the provision, but seek to limit its application.
Recently, Carol Tello and Jennifer Molnar of Sutherland presented on planning considerations in the event that an extenders package does not get through Congress.