SECTION 3. DOMESTIC — Internal Revenue Bulletin 2025-43

CORPORATE TRANSACTIONS

.01 Purpose . The Treasury Department and the IRS anticipate that the forthcoming proposed regulations will revise proposed §§ 1.56A-18 and 1.56A-19 con

sistent with the guidance provided in this section 3 to allow a CAMT entity to determine (i) the amount of its AFSI resulting from its ownership of stock of a domestic corporation (as determined under proposed §1.56A-1(f)(1) and (2)) that is not a member of the same tax consolidated group as the CAMT entity, and (ii) the AFSI and CAMT basis consequences of certain transactions involving domestic corporations. In response to commenters’ requests, the guidance set forth in this section 3 is intended to reduce compliance burdens and costs associated with applying proposed §§ 1.56A-18 and 1.56A-19 by more closely following the rules that apply for regular tax purposes and incorporating a more limited set of CAMT inputs.

.02 Definitions . The following definitions apply solely for purposes of section 3 of this notice: (1) Domestic covered asset transaction . The term “domestic covered asset transaction” means a transaction (other than a covered asset transaction, as defined in proposed § 1.56A-4(b)(1)) in which one or more assets are—

(a) Transferred by a domestic corporation in a transfer—

(i) To which § 311, 355 (in the case of stock, or stock and securities, of a domestic corporation described in § 355(a)(1) (A)), or 361 applies; or

(ii) That is part of a complete liquidation to which §§ 332 and 337 apply;

(b) Transferred to a domestic corporation in a transfer to which § 351 or 361 applies; or

(c) Stock or securities of a domestic corporation that is a party to a reorganization described in § 368(a)(1), and that stock or those securities are transferred in a transfer to which § 354 or 356 applies.

(2) Section 336(e) transaction . The term “§ 336(e) transaction” means a disposition, as defined in § 1.336-1(b)(5), of stock of a domestic corporation with respect to which the seller makes an election under § 336(e).

(3) Section 338 transaction . The term “§ 338 transaction” means a purchase, as defined in § 338(h)(3), of stock of a domestic corporation with respect to which—

(a) The purchaser makes an election under § 338(g); or

(b) The purchaser and the seller make an election under § 338(h)(10).

(4) Transfer . The term “transfer” (or “transferred” or “transfers” or “transferring”), when used with respect to an asset, means a sale, distribution, exchange, or any other disposition of the asset. If the asset is stock or securities of a corporation, the term “transfer” includes the issuance or redemption of that stock or securities by the corporation.

.03 Adjustments to AFSI . (1) Adjustments with respect to stock of a domestic corporation .

(a) In general . If a CAMT entity directly owns stock of a domestic corporation that is not a member of a tax consolidated group of which the CAMT entity is a member, the AFSI of the CAMT entity with respect to its ownership of stock of the domestic corporation is adjusted—

(i) To disregard any items of income, expense, gain, and loss resulting from ownership of stock of the domestic corporation, including any items that result from acquiring or transferring the stock (such as remeasurement gain or loss), reflected in the CAMT entity’s FSI; and

(ii) To include any items of income, deduction, gain, and loss for regular tax purposes resulting from ownership of stock of the domestic corporation, including any items that result from acquiring or transferring the stock; however, for this purpose, the amount of each such item is computed by substituting the CAMT entity’s CAMT basis in the stock of the domestic corporation for the CAMT entity’s basis in that stock for regular tax purposes.

(b) Amount and character of distribu- tions . The amount and character of any distribution described in section 3.03(1) (a) of this notice is determined using earnings and profits as determined for regular tax purposes.

(2) Adjustments with respect to domes- tic covered asset transactions . If a CAMT entity transfers an asset, other than stock of a domestic corporation, in a domestic covered asset transaction, the AFSI of the CAMT entity is adjusted—

(a) To Disregard any items of income, expense, gain, and loss with respect to the transferred asset resulting from the domestic covered asset transaction reflected in the CAMT entity’s FSI; and

Bulletin No. 2025–43 535 October 20, 2025

(b) To Include any items of income, deduction, gain, and loss for regular tax purposes with respect to the transferred asset resulting from the domestic covered asset transaction; however, for this purpose, the amount of each such item is computed by substituting the CAMT entity’s CAMT basis in the transferred asset for the CAMT entity’s basis in the transferred asset for regular tax purposes.

(3) Adjustments with respect to § 336(e) transactions or § 338 transac- tions . If stock of a domestic corporation is disposed of in a § 336(e) transaction or acquired in a § 338 transaction, the AFSI of the domestic corporation is adjusted to include any net gain or loss that results for regular tax purposes with respect to all assets the domestic corporation is treated as selling by reason of the transaction; however, for this purpose, the amount of gain or loss with respect to each asset that the domestic corporation is deemed to have sold by reason of the transaction is computed by substituting the domestic corporation’s CAMT basis in the asset for the domestic corporation’s basis in the asset for regular tax purposes.

.04 Determining CAMT basis in cer- tain cases .

(1) Domestic covered asset trans- actions . This section 3.04(1) provides interim guidance for determining the transferee’s CAMT basis in an asset transferred in a domestic covered asset transaction (or the transferee’s CAMT basis in an asset retained, in the case of stock of a distributing corporation in certain distributions under § 355):

(a) If the asset is transferred in a transaction described in § 311, the transferee’s CAMT basis in the asset is determined in the manner described in § 301(d).

(b) If the asset is transferred in a transaction described in §§ 332 and 337, the transferee’s CAMT basis in the asset is determined in the manner described in § 334(b), substituting the transferor’s CAMT basis in the asset for the transferor’s basis in the asset for regular tax purposes.

(i) If the transferor is a CAMT entity, the transferee’s CAMT basis in the asset is determined in the manner described in § 362, substituting the transferor’s CAMT

basis in the asset for the transferor’s basis in the asset for regular tax purposes, and substituting the amount of income included in the transferor’s AFSI for the amount of gain recognized to the transferor for regular tax purposes; or

(ii) If the transferor is not a CAMT entity, the transferee’s CAMT basis in the asset is equal to the transferee’s basis in the asset for regular tax purposes, including any basis increase under § 362 in the amount of gain recognized to the transferor on the transfer.

(d) If the asset transferred is stock or securities of a domestic corporation (that is, a controlled corporation) described in § 355(a)(1)(A) and the asset is transferred by a domestic transferor corporation (that is, a distributing corporation) in a transaction to which § 355 applies, the transferee shareholder or security holder’s CAMT basis in the stock or securities of both the domestic distributing corporation and the domestic controlled corporation is determined by applying § 358, substituting the transferee’s CAMT basis in the stock or securities of the domestic distributing corporation for the transferee’s basis in the stock or securities of the domestic distributing corporation for regular tax purposes.

(e) If the asset transferred is exchanged for stock or securities of a domestic corporation that is a party to a reorganization (as defined in § 368(b)) or for stock or securities of a section 351 transferee (as defined in proposed § 1.56A-18(b)(26)), the transferor’s CAMT basis in the assets received is determined by applying § 358, substituting the transferor’s CAMT basis in the assets transferred for the transferor’s basis in those assets for regular tax purposes, and substituting the amount of income or loss included in the transferor’s AFSI for the amount of gain or loss recognized to the transferor for regular tax purposes.

(f) If a transferor in a domestic covered asset transaction described in section 3.04(1)(a) through (e) of this notice did not determine the CAMT basis in the assets transferred in that transaction to a transferee CAMT entity, see section 3.04(4) of this notice for guidance for the transferee CAMT entity to determine the CAMT basis of those transferred assets.

(2) CAMT basis in assets deemed pur- chased in § 336(e) transactions and § 338

transactions . If stock of a domestic corporation is acquired in a § 336(e) transaction or a § 338 transaction, immediately after the transaction, the domestic corporation’s CAMT basis in the assets it is deemed to have purchased by reason of the transaction is equal to the domestic corporation’s basis in those assets for regular tax purposes.

(3) Purchase accounting and push down accounting . If a CAMT entity acquires stock of a domestic corporation, then any purchase accounting and push down accounting adjustments, as applicable, with respect to the acquisition of the stock of the domestic corporation are disregarded for purposes of determining—

(a) The CAMT basis in the domestic corporation’s assets; and

(b) The CAMT entity’s AFSI. (4) Determination of a transferee’s ini- tial CAMT basis in certain circumstances .

(a) Overview . This section 3.04(4) applies if a domestic CAMT entity acquires assets in a domestic covered asset transaction from a transferor that does not determine the CAMT basis in those transferred assets. If this section 3.04(4) applies, the initial CAMT basis in those assets is the transferee CAMT entity’s basis in those assets for regular tax purposes.

(b) Timing of determination . A transferee CAMT entity determines the initial CAMT basis in assets acquired from a transferor in a domestic covered asset transaction to be the basis of those assets (determined under section 3.04(4)(a) of this notice) as of the end of the day on the date of the domestic covered asset transaction.

(5) Coordination with proposed §§ 1.56A-15 and 1.56A-16. Proposed §1.56A-15(e) and 1.56A-16(e) (as applicable) are applied by taking into account any adjustments made by a transferee CAMT entity to the AFS basis of section 168 property or qualified wireless spectrum acquired in a domestic covered asset transaction under this section 3.