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US IRS concludes that termination fees in failed merger were capital losses

|Tax Alerts, Legislation & Policy, Na ...|United States
United States

  • The IRS determined that transaction termination payments are Section 165 losses and not Section 162 business expenses.

  • Applying Section 1234, the IRS Office of Chief Counsel determined that a taxpayer must recharacterize a loss under Section 165 for termination fees as a capital loss.

  • The IRS conclusion that Section 1234A applies to all transaction-related expenses conflicts with views held by som…

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