Regulations Denying Foreign Tax Credits in Structured Transactions Enter into Force

July 20, 2008

The attached memorandum discusses regulations adopted last week that are intended to prevent U.S. taxpayers from claiming credits for foreign taxes paid in “structured passive investment arrangements” (“SPIAs”). The regulations generally follow the approach taken by proposed regulations issued in March of 2007, but in some respects are significantly broader in scope, and by their terms could apply to some conventional joint ventures in which neither party expects to derive tax benefits. The regulations apply retroactively to taxes paid or accrued at any time during taxable years ending after July 15, 2008.

Please call the lawyers listed in the memorandum, or any of your contacts in the Cleary Gottlieb tax group, if you have questions concerning the implications of the regulations.