Photo of Abraham Gutwein

Abraham Gutwein is a senior counsel in the Tax Department. Abe devotes a substantial part of his time to the resolution of tax controversies and advising on the tax aspects of bankruptcy reorganizations.

Abe has advised numerous corporate and individual clients on a broad range of substantive and procedural issues that have arisen during the course of federal, state and local tax disputes, and has participated in the litigation and settlement of many such disputes at the audit and administrative levels and before the courts.

In addition, Abe frequently counsels a broad range of clients on sales tax issues, as well as being involved in all aspects of Proskauer's general tax practice.

Abe advises clients about the complex tax issues that often arise in the course of bankruptcy restructurings, including cancellation of debt income, net operating losses, original issue discount and the operation of the “priority” rules governing governmental tax claims.

On December 9, 2020, the Financial Crimes Enforcement Network (“FinCEN”) issued Notice 2020-1, extending the filing deadline for the Report of Foreign Bank and Financial Accounts, FinCEN Form 114 (FBAR), for certain individuals with signature or other authority over (but no financial interest in) employer-owned foreign financial accounts to April

On December 20, 2019, the Financial Crimes Enforcement Network (“FinCEN”) issued Notice 2019-1, extending the filing deadline for the Report of Foreign Bank and Financial Accounts, FinCEN Form 114 (FBAR), for certain individuals with signature or other authority over (but no financial interest in) employer-owned foreign financial accounts to

On December 4, 2018, FinCEN issued Notice 2018-1, extending the filing deadline for the Report of Foreign Bank and Financial Accounts, FinCEN Form 114 (FBAR), for certain individuals with signature or other authority over (but no financial interest in) employer-owned foreign financial accounts to April 15, 2020. FinCEN has provided similar extensions over the previous six years.[1] This new extension applies to reporters with signatory authority during the 2018 calendar year and to those individuals whose reporting deadline was extended under prior notices (such as certain employees or officers of investment advisers registered with the U.S. Securities and Exchange Commission (SEC) who have signature authority over, but no financial interest in, certain foreign financial accounts).[2] All other filers must still file by April 15, 2019, although FinCEN will grant an automatic extension until October 15, 2019.

This post outlines at a high-level certain provisions under the recently enacted 2017 tax legislation (Pub. L. 115-97, the “Tax Act”) that may affect M&A Transactions.  Some of these rules are very complex, particularly in cross-border transactions, and this post describes them in general terms without all of their fine details.  The discussion of foreign corporations below is in the context of foreign subsidiaries of U.S. groups.

Multiple Lower Effective Corporate Tax Rates

There are now multiple effective corporate tax rates and the much-despised corporate alternative minimum tax has been repealed.  Because all of them are substantially below 35 percent, they may contribute to an increase in asset prices.  In addition, tax benefits now may be less valuable to corporate purchasers than to non-corporate buyers.

Base Corporate Income Tax Rate21 percent tax rate (effective for taxable years beginning after December 31, 2017).  No sunset provision.

Certain Foreign Source Income Earned from the U.S (“FDII”).—Intended to attract cross-border business back to the U.S., a tax rate lower than 21 percent is now imposed on certain excess returns earned by a U.S. corporation on the sale, license or lease of property or the provision of services to an unrelated foreign party for foreign use or consumption.  (Additional rules apply when the transaction is with a related party.)  In broad terms, the lower rate applies to the foreign source income from these transactions in excess of 10 percent of the corporation’s allocable depreciable tangible property basis.

As noted in our January 5, 2017 client alert, FinCEN issued Notice 2016-1, which extends the filing deadline for the Report of Foreign Bank and Financial Accounts, FinCEN Form 114 (FBAR), for certain individuals with signature or other authority over (but no financial interest in) employer-owned foreign financial accounts