International Tax

U.S.-to-Foreign Transfers Under Section 367(a) (Portfolio 919)

  • This Portfolio examines the rules that apply to various forms of foreign corporate or partnership formations or restructurings under §367 and under related provisions such as §6038B.


The Portfolio begins with a review of the scope and general operation of §367(a), describing the elements of transactions that are subject to it. It then reviews the application of §367(a) to outbound transfers of business property, including the significant exception for transfers of foreign business property. The portfolio also discusses outbound transfers of stocks and securities that would otherwise qualify for nonrecognition treatment, and the use of gain recognition agreements to defer the recognition of gain on such transfers. Finally, it concludes with a review of the special rules under §367(a)(5) for U.S.-to-Foreign Reorganizations, the reporting requirements under §6038B, and the anti-expatriation provisions of §7874, which overlap some of the rules in §367(a). The portfolio also includes Worksheets that reproduce the important legislative history from the Tax Reform Act of 1984, various IRS guidance, and a sample gain recognition agreement.

The objective of this Portfolio is to describe the intent and operation of §367(a) and related provisions, and to highlight various planning techniques used by taxpayers to cope with the rules in the context of particular types of transactions.

Table of Contents

I. Introduction
II. Scope and General Operation of § 367(a)(1)
III. U.S.-to-Foreign Transfers of Tangible Property Under § 367(a)
IV. U.S.-to-Foreign Transfers of Stock or Securities Under § 367(a)
V. Special Rules for U.S.-to-Foreign Reorganizations Under § 367(a)(5)
VI. Reporting of § 367(a) Transfers Under § 6038B
VII. Treatment of Expatriated Entities Under § 7874

Bruce N. Davis
Partner (Retired)
White & Case LLP