SECTION 2. TRANSACTIONS AT

ISSUE

The IRS and Treasury are aware that certain taxpayers are engaging in transactions intended to repatriate cash or other property from foreign subsidiaries without the recognition of gain or a dividend inclusion. In one such transaction, for example, USP, a domestic corporation, owns 100 percent of the stock of FA, a foreign corporation, and USP’s basis in its FA stock is $100x. USP also owns 100 percent of the stock of UST, a domestic corporation, and USP’s basis in its UST stock equals its fair market value of $100x. UST’s property consists of property with zero tax basis, such as self-created intangibles or fully depreciated tangible property. UST sells its property to FA in exchange for $100x cash and, in connection with the transaction, UST liquidates and FA transfers all of the property acquired from UST to U.S. Newco, a newly formed domestic corporation, in exchange for 100 percent of the U.S. Newco stock (the Transaction). Other variations of the Transaction may be available. For example, FA may purchase the stock of UST from USP for $100x and, in connection with the acquisition, UST merges into a domestic limited liability

who transfer stock acquired pursuant to an option granted under an employee stock purchase plan. It provides that the statement the corporation furnishes to the employee must include the following information (1) The name and address of the corporation whose stock is being transferred;

(2) The name, address, and identifying number of the transferor;

(3) The date such stock was transferred to the transferor;

(4) The number of shares to which title is being transferred; and

(5) The type of option under which the transferred shares were acquired.