A&O Shearman partner Lorenz Haselberger publishes article on recent IRS advice memoranda relevant to inbound debt acquisitions and sourcing of income

The CCAs consider whether certain U.S.-managed offshore hedge funds that regularly entered into securities repos with their U.S. prime brokers were thereby engaged in a U.S. trade or business or derived U.S.-source income subject to federal withholding tax.   

Haselberger identifies practical areas in which the CCAs provide welcome guidance for offshore investors and lenders, focusing on the implications of the CCAs’ U.S. trade or business determination for inbound investments in U.S. corporate loans as well as securities-backed lending. He also examines the CCAs’ sourcing analysis, explaining why it is unpersuasive and should not alter existing approaches to sourcing income by analogy.

To read Haselberger’s complete analysis of the CCAs, please see the attached PDF.