Proposed IRS Regulations Would Largely Eliminate “Section 956 Deemed Dividends” for U.S. Multinationals and Expand the Range of Credit Support From Non-U.S. Subsidiaries That They Can Provide to Lenders

Under proposed regulations issued yesterday (October 31), U.S. multinationals would generally be relieved from the “Section 956 deemed dividend rules” that have significantly limited their ability to provide lenders with credit support (for example, in the form of guarantees and collateral) from their non-U.S. subsidiaries. In general, under the proposed regulations, the credit packages provided…