Section 1.59A-0 - Table of contentsThis section contains a listing of the headings for §§ 1.59A-1 , 1.59A-2 , 1.59A-3 , 1.59A-4 , 1.59A-5 , 1.59A-6 , 1.59A-7 , 1.59A-8 , 1.59A-9 , and 1.59A-10 .
§ 1.59A-1Base erosion and anti-abuse tax.(b) Definitions. (2) Applicable section 38 credits.(5) Base erosion and anti-abuse tax rate.(6) Business interest expense.(8) Disallowed business interest expense carryforward.(9) Domestic related business interest expense.(11) Foreign related business interest expense.(12) Foreign related party.(14) Member of an aggregate group.(15) Registered securities dealer.(16) Regular tax liability.(17) Related party. (iii) Application of section 318.(18) TLAC long-term debt required amount.(19) TLAC securities amount.(21) Unrelated business interest expense.§ 1.59A-2Applicable taxpayer.(c) Aggregation rules. (2) Aggregate group determined with respect to each taxpayer.(ii) Change in the composition of an aggregate group.(3) Taxable year of members of an aggregate group.(4) Periods before and after a corporation is a member of an aggregate group.(ii) Deemed taxable year-end.(iii) Items allocable to deemed taxable years before and after deemed taxable year-end.(5) Short taxable year. (i) Short period of the taxpayer. (B) Determining the gross receipts and base erosion percentage of the aggregate group of a taxpayer for a short period.(ii) Short period of a member of the taxpayer's aggregate group. (A) Multiple taxable years of a member of the taxpayer's aggregate group comprised of more than 12 months.(B) Short period or periods of a member of the taxpayer's aggregate group comprised of fewer than 12 months from change in taxable year.(6) Treatment of predecessors.(8) Transition rule for aggregate group members with different taxable years.(d) Gross receipts test. (1) Amount of gross receipts.(2) Taxpayer not in existence for entire three-year period.(3) Gross receipts of foreign corporations.(4) Gross receipts of an insurance company.(5) Reductions in gross receipts.(e) Base erosion percentage test.(2) Base erosion percentage test for banks and registered securities dealers. (iii) De minimis exception for banking and registered securities dealer activities.(3) Computation of base erosion percentage. (ii) Certain items not taken into account in denominator.(iii) Effect of treaties on base erosion percentage determination.(iv) Amounts paid or accrued between members of a consolidated group.(v) Deductions and base erosion tax benefits from partnerships.(vi) Mark-to-market positions.(vii) Reinsurance losses incurred and claims payments.(viii) Certain payments that qualify for the effectively connected income exception and another base erosion payment exception.(f) Examples. (1) Example 1: Mark-to-market. (2) Example 2: Member leaving an aggregate group.§ 1.59A-3Base erosion payments and base erosion tax benefits.(b) Base erosion payments. (2) Operating rules. (ii) Amounts paid or accrued in cash and other consideration.(iii) Transactions providing for net payments.(iv) Amounts paid or accrued with respect to mark-to-market position.(v) Coordination among categories of base erosion payments.(vi) Certain domestic passthrough entities. (B) Amount of base erosion payment.(C) Specified domestic passthrough.(D) Specified foreign related party.(vii) Transfers of property to related taxpayers.(viii) Reductions to determine gross income.(ix) Losses recognized on the sale or transfer of property.(3) Exceptions to base erosion payment. (i) Certain services cost method amounts. (B) Eligibility for the services cost method exception.(C) Adequate books and records.(ii) Qualified derivative payments.(iii) Effectively connected income.(B) Application to certain treaty residents.(C) Application to partnerships.(iv) Exchange loss on a section 988 transaction.(v) Amounts paid or accrued with respect to TLAC securities and foreign TLAC securities. (B) Limitation on exclusion for TLAC securities.(D) Average domestic TLAC securities amount.(E) Average TLAC long-term debt required amount.(F) Limitation on exclusion for foreign TLAC securities. (2) Foreign TLAC long-term debt required amount.(3) No specified minimum provided by local law.(4) Foreign TLAC security.(vi) Amounts paid or accrued in taxable years beginning before January 1, 2018.(vii) Business interest carried forward from taxable years beginning before January 1, 2018.(viii) Specified nonrecognition transactions. (B) Other property transferred to a foreign related party in a specified nonrecognition transaction.(C) Other property received from a foreign related party in certain specified nonrecognition transactions.(D) Definition of other property.(E) Allocation of other property.(ix) Reinsurance losses incurred and claims payments.(B) Regulated foreign insurance company.(4) Rules for determining the amount of certain base erosion payments. (i) Interest expense allocable to a foreign corporation's effectively connected income. (A) Methods described in § 1.882-5 .(B) U.S.-booked liabilities determination.(C) U.S.-booked liabilities in excess of U.S.-connected liabilities.(D) Election to use financial statements.(E) Coordination with certain tax treaties.(2) Hypothetical § 1.882-5 interest expense defined.(3) Consistency requirement.(F) Coordination with exception for foreign TLAC securities.(ii) Other deductions allowed with respect to effectively connected income.(iii) Depreciable property.(iv) Coordination with ECI exception.(v) Coordination with certain tax treaties. (B) Internal dealings under certain income tax treaties.(vi) Business interest expense arising in taxable years beginning after December 31, 2017.(c) Base erosion tax benefit.(2) Exception to base erosion tax benefit.(ii) Branch-level interest tax.(3) Effect of treaty on base erosion tax benefit.(4) Application of section 163(j) to base erosion payments. (i) Classification of payments or accruals of business interest expense based on the payee. (A) Classification of payments or accruals of business interest expense of a corporation.(B) Classification of payments or accruals of business interest expense by a partnership.(C) Classification of payments or accruals of business interest expense paid or accrued to a foreign related party that is subject to an exception.(2) TLAC interest and interest subject to withholding tax.(ii) Ordering rules for business interest expense that is limited under section 163(j)(1) to determine which classifications of business interest expense are deducted and which classifications of business interest expense are carried forward. (B) Ordering rules for treating business interest expense deduction and disallowed business interest expense carryforwards as foreign related business interest expense, domestic related business interest expense, and unrelated business interest expense. (1) General ordering rule for allocating business interest expense deduction between classifications.(2) Ordering of business interest expense incurred by a corporation.(3) Ordering of business interest expense incurred by a partnership and allocated to a corporate partner.(6) Election to waive allowed deductions.(ii) Time and manner for election to waive deduction.(B) Information required to make the election to waive allowed deductions.(iii) Effect of election to waive deduction. (A) In general. (1) Consistent treatment.(2) No allocation and apportionment of waived deductions.(3) Effect of waiver of deductions described in §§ 1.861-10 and 1.861-10T .(4) Effect of the election to waive deductions on the stock basis of a consolidated group member.(B) Effect of the election to waive deductions disregarded for certain purposes.(C) Not a method of accounting.(D) Effect of the election in determining section 481(a) adjustments.(iv) Rules applicable to partners and partnerships.(B) Rule for determining the adjusted basis of a partner's interest in a partnership.(C) Rule for applying section 163(j).(D) Limited application of election to waive deductions with respect to adjustments made pursuant to audit procedures under sections 6221 through 6241.(v) Rule applicable to premium and other consideration paid or accrued by the taxpayer for any reinsurance payments that are taken into account under section 803(a)(1)(B) or 832(b)(4)(A).(d) Examples. (1) Example 1: Determining a base erosion payment.(2) Example 2: Interest allocable under § 1.882-5 . (3) Example 3: Interaction with section 163(j).(ii) Analysis. (A) Classification of business interest.(B) Ordering rules for disallowed business interest expense carryforward.(4) Example 4: Interaction with section 163(j); carryforward.(ii) Analysis. (A) Classification of business interest.(B) Ordering rules for disallowed business interest expense carryforward.(5) Example 5: Interaction with section 163(j); carryforward.(6) Example 6: Interaction with section 163(j); partnership.(ii) Partnership level analysis.(iii) Partner level allocations analysis.(iv) Partner level allocations for determining base erosion tax benefits.(v) Computation of modified taxable income.(7) Example 7: Transfers of property to related taxpayers. (8) Example 8: Effect of election to waive deduction on method of accounting.(9) Example 9: Change of accounting method when taxpayer has waived a deduction. (ii) Analysis. (A) Computation of the section 481(a) adjustment.(B) Computation of basis adjustments.§ 1.59A-4Modified taxable income.(b) Computation of modified taxable income. (2) Modifications to taxable income. (i) Base erosion tax benefits.(ii) Certain net operating loss deductions.(3) Rule for holders of a residual interest in a REMIC.(c) Examples. (1) Example 1: Current year loss. (2) Example 2: Net operating loss deduction. § 1.59A-5Base erosion minimum tax amount. (b) Base erosion minimum tax amount. (2) Calculation of base erosion minimum tax amount.(3) Credits that do not reduce regular tax liability.(i) Taxable years beginning on or before December 31, 2025.(ii) Taxable years beginning after December 31, 2025.(c) Base erosion and anti-abuse tax rate.(1) In general.(ii) Calendar years 2019 through 2025.(iii) Calendar years after 2025.(2) Increased rate for banks and registered securities dealers. (ii) De minimis exception to increased rate for banks and registered securities dealers.(3) Application of section 15 to tax rates in section 59A.(ii) Change in tax rate pursuant to section 59A(b)(1)(A).(iii) Change in rate pursuant to section 59A(b)(2).§ 1.59A-6Qualified derivative payment.(b) Qualified derivative payment. (2) Reporting requirements. (ii) Failure to satisfy the reporting requirement.(iii) Reporting of aggregate amount of qualified derivative payments.(iv) Transition period for qualified derivative payment reporting.(3) Amount of any qualified derivative payment.(ii) Net qualified derivative payment that includes a payment that is a base erosion payment.(c) Exceptions for payments otherwise treated as base erosion payments.(d) Derivative defined. (2) Exceptions. (ii) Insurance contracts.(iii) Securities lending and sale-repurchase transactions.(A) Multi-step transactions treated as financing.(B) Special rule for payments associated with the cash collateral provided in a securities lending transaction or substantially similar transaction.(C) Anti-abuse exception for certain transactions that are the economic equivalent of substantially unsecured cash borrowing.(3) American depository receipts.(e) Examples. (1) Example 1: Notional principal contract as QDP.(2) Example 2: Securities lending anti-abuse rule.§ 1.59A-7Application of base erosion and anti-abuse tax to partnerships. (b) Application of section 59A to partnerships.(c) Base erosion payment.(1) Payments made by or to a partnership.(2) Transfers of certain property.(3) Transfers of a partnership interest.(ii) Transfers of a partnership interest by a partner.(iii) Certain issuances of a partnership interest by a partnership.(iv) Partnership interest transfers defined.(4) Increased basis from a distribution.(5) Operating rules applicable to base erosion payments.(i) Single payment characterized as separate transactions.(ii) Ordering rule with respect to transfers of a partnership interest.(iii) Consideration for base erosion payment or property resulting in base erosion tax benefits.(iv) Non-cash consideration.(v) Allocations of income in lieu of deductions.(d) Base erosion tax benefit for partners. (2) Exception for base erosion tax benefits of certain small partners.(e) Other rules for applying section 59A to partnerships.(1) Partner's distributive share.(2) Gross receipts. (ii) Foreign corporation.(3) Registered securities dealers.(4) Application of sections 163(j) and 59A(c)(3) to partners.(f) Foreign related party.(g) Examples. (2) Examples. (i) Example 1: Contributions to a partnership on partnership formation.(ii) Example 2: Section 704(c) and remedial allocations.(iii) Example 3: Sale of a partnership interest without a section 754 election.(iv) Example 4: Sale of a partnership interest with section 754 election. (v) Example 5: Purchase of depreciable property from a partnership.(vi) Example 6: Sale of a partnership interest to a second partnership. (vii) Example 7: Distribution of cash by a partnership to a foreign related party.(viii) Example 8: Distribution of property by a partnership to a taxpayer.(ix) Example 9: Distribution of property by a partnership in liquidation of a foreign related party's interest. (x) Example 10: Section 704(c) and curative allocations.§ 1.59A-9Anti-abuse and recharacterization rules. (b) Anti-abuse rules. (1) Transactions involving unrelated persons, conduits, or intermediaries.(2) Transactions to increase the amount of deductions taken into account in the denominator of the base erosion percentage computation.(3) Transactions to avoid the application of rules applicable to banks and registered securities dealers.(4) Nonrecognition transactions.(5) Transactions involving derivatives on a partnership interest.(6) Allocations to eliminate or reduce a base erosion payment.(c) Examples. (2) Example 1: Substitution of payments that are not base erosion payments for payments that otherwise would be base erosion payments through a conduit or intermediary. (3) Example 2: Alternative transaction to base erosion payment.(4) Example 3: Alternative financing source. (5) Example 4: Alternative financing source that is a conduit.(6) Example 5: Intermediary acquisition. (7) Example 6: Offsetting transactions to increase the amount of deductions taken into account in the denominator of the base erosion percentage computation.(8) Example 7: Ordinary course transactions that increase the amount of deductions taken into account in the denominator of the base erosion percentage computation. (9) Example 8: Transactions to avoid the application of rules applicable to banks and registered securities dealers. (10) Example 9: Transactions that do not avoid the application of rules applicable to banks and registered securities dealers.(11) Example 10: Acquisition of depreciable property in a nonrecognition transaction.(12) Example 11: Transactions between related parties with a principal purpose of increasing the adjusted basis of property.§ 1.59A-10Applicability date. (a) General applicability date.(b) Exception. This section contains a listing of the headings for §§ 1.59A-1 , 1.59A-2 , 1.59A-3 , 1.59A-4 , 1.59A-5 , 1.59A-6 , 1.59A-7 , 1.59A-8 , 1.59A-9 , and 1.59A-10 .
§ 1.59A-1Base erosion and anti-abuse tax.(b) Definitions. (2) Applicable section 38 credits.(5) Base erosion and anti-abuse tax rate.(6) Business interest expense.(8) Disallowed business interest expense carryforward.(9) Domestic related business interest expense.(11) Foreign related business interest expense.(12) Foreign related party.(14) Member of an aggregate group.(15) Registered securities dealer.(16) Regular tax liability.(17) Related party. (iii) Application of section 318.(18) TLAC long-term debt required amount.(19) TLAC securities amount.(21) Unrelated business interest expense.§ 1.59A-2Applicable taxpayer.(c) Aggregation rules. (2) Aggregate group determined with respect to each taxpayer.(ii) Change in the composition of an aggregate group.(3) Taxable year of members of an aggregate group.(4) Periods before and after a corporation is a member of an aggregate group.(ii) Deemed taxable year-end.(iii) Items allocable to deemed taxable years before and after deemed taxable year-end.(5) Short taxable year. (i) Short period of the taxpayer. (B) Determining the gross receipts and base erosion percentage of the aggregate group of a taxpayer for a short period.(ii) Short period of a member of the taxpayer's aggregate group. (A) Multiple taxable years of a member of the taxpayer's aggregate group comprised of more than 12 months.(B) Short period or periods of a member of the taxpayer's aggregate group comprised of fewer than 12 months from change in taxable year.(6) Treatment of predecessors.(8) Transition rule for aggregate group members with different taxable years.(d) Gross receipts test. (1) Amount of gross receipts.(2) Taxpayer not in existence for entire three-year period.(3) Gross receipts of foreign corporations.(4) Gross receipts of an insurance company.(5) Reductions in gross receipts.(e) Base erosion percentage test.(2) Base erosion percentage test for banks and registered securities dealers. (iii) De minimis exception for banking and registered securities dealer activities.(3) Computation of base erosion percentage. (ii) Certain items not taken into account in denominator.(iii) Effect of treaties on base erosion percentage determination.(iv) Amounts paid or accrued between members of a consolidated group.(v) Deductions and base erosion tax benefits from partnerships.(vi) Mark-to-market positions.(vii) Reinsurance losses incurred and claims payments.(viii) Certain payments that qualify for the effectively connected income exception and another base erosion payment exception.(f) Examples. (1) Example 1: Mark-to-market. (2) Example 2: Member leaving an aggregate group.§ 1.59A-3Base erosion payments and base erosion tax benefits.(b) Base erosion payments. (2) Operating rules. (ii) Amounts paid or accrued in cash and other consideration.(iii) Transactions providing for net payments.(iv) Amounts paid or accrued with respect to mark-to-market position.(v) Coordination among categories of base erosion payments.(vi) Certain domestic passthrough entities. (B) Amount of base erosion payment.(C) Specified domestic passthrough.(D) Specified foreign related party.(vii) Transfers of property to related taxpayers.(viii) Reductions to determine gross income.(ix) Losses recognized on the sale or transfer of property.(3) Exceptions to base erosion payment. (i) Certain services cost method amounts. (B) Eligibility for the services cost method exception.(C) Adequate books and records.(ii) Qualified derivative payments.(iii) Effectively connected income.(B) Application to certain treaty residents.(C) Application to partnerships.(iv) Exchange loss on a section 988 transaction.(v) Amounts paid or accrued with respect to TLAC securities and foreign TLAC securities. (B) Limitation on exclusion for TLAC securities.(D) Average domestic TLAC securities amount.(E) Average TLAC long-term debt required amount.(F) Limitation on exclusion for foreign TLAC securities. (2) Foreign TLAC long-term debt required amount.(3) No specified minimum provided by local law.(4) Foreign TLAC security.(vi) Amounts paid or accrued in taxable years beginning before January 1, 2018.(vii) Business interest carried forward from taxable years beginning before January 1, 2018.(viii) Specified nonrecognition transactions. (B) Other property transferred to a foreign related party in a specified nonrecognition transaction.(C) Other property received from a foreign related party in certain specified nonrecognition transactions.(D) Definition of other property.(E) Allocation of other property.(ix) Reinsurance losses incurred and claims payments.(B) Regulated foreign insurance company.(4) Rules for determining the amount of certain base erosion payments. (i) Interest expense allocable to a foreign corporation's effectively connected income. (A) Methods described in § 1.882-5 .(B) U.S.-booked liabilities determination.(C) U.S.-booked liabilities in excess of U.S.-connected liabilities.(D) Election to use financial statements.(E) Coordination with certain tax treaties.(2) Hypothetical § 1.882-5 interest expense defined.(3) Consistency requirement.(F) Coordination with exception for foreign TLAC securities.(ii) Other deductions allowed with respect to effectively connected income.(iii) Depreciable property.(iv) Coordination with ECI exception.(v) Coordination with certain tax treaties. (B) Internal dealings under certain income tax treaties.(vi) Business interest expense arising in taxable years beginning after December 31, 2017.(c) Base erosion tax benefit.(2) Exception to base erosion tax benefit.(ii) Branch-level interest tax.(3) Effect of treaty on base erosion tax benefit.(4) Application of section 163(j) to base erosion payments. (i) Classification of payments or accruals of business interest expense based on the payee. (A) Classification of payments or accruals of business interest expense of a corporation.(B) Classification of payments or accruals of business interest expense by a partnership.(C) Classification of payments or accruals of business interest expense paid or accrued to a foreign related party that is subject to an exception.(2) TLAC interest and interest subject to withholding tax.(ii) Ordering rules for business interest expense that is limited under section 163(j)(1) to determine which classifications of business interest expense are deducted and which classifications of business interest expense are carried forward. (B) Ordering rules for treating business interest expense deduction and disallowed business interest expense carryforwards as foreign related business interest expense, domestic related business interest expense, and unrelated business interest expense. (1) General ordering rule for allocating business interest expense deduction between classifications.(2) Ordering of business interest expense incurred by a corporation.(3) Ordering of business interest expense incurred by a partnership and allocated to a corporate partner.(6) Election to waive allowed deductions.(ii) Time and manner for election to waive deduction.(B) Information required to make the election to waive allowed deductions.(iii) Effect of election to waive deduction. (A) In general. (1) Consistent treatment.(2) No allocation and apportionment of waived deductions.(3) Effect of waiver of deductions described in §§ 1.861-10 and 1.861-10T .(4) Effect of the election to waive deductions on the stock basis of a consolidated group member.(B) Effect of the election to waive deductions disregarded for certain purposes.(C) Not a method of accounting.(D) Effect of the election in determining section 481(a) adjustments.(iv) Rules applicable to partners and partnerships.(B) Rule for determining the adjusted basis of a partner's interest in a partnership.(C) Rule for applying section 163(j).(D) Limited application of election to waive deductions with respect to adjustments made pursuant to audit procedures under sections 6221 through 6241.(v) Rule applicable to premium and other consideration paid or accrued by the taxpayer for any reinsurance payments that are taken into account under section 803(a)(1)(B) or 832(b)(4)(A).(d) Examples. (1) Example 1: Determining a base erosion payment.(2) Example 2: Interest allocable under § 1.882-5 . (3) Example 3: Interaction with section 163(j).(ii) Analysis. (A) Classification of business interest.(B) Ordering rules for disallowed business interest expense carryforward.(4) Example 4: Interaction with section 163(j); carryforward.(ii) Analysis. (A) Classification of business interest.(B) Ordering rules for disallowed business interest expense carryforward.(5) Example 5: Interaction with section 163(j); carryforward.(6) Example 6: Interaction with section 163(j); partnership.(ii) Partnership level analysis.(iii) Partner level allocations analysis.(iv) Partner level allocations for determining base erosion tax benefits.(v) Computation of modified taxable income.(7) Example 7: Transfers of property to related taxpayers. (8) Example 8: Effect of election to waive deduction on method of accounting.(9) Example 9: Change of accounting method when taxpayer has waived a deduction. (ii) Analysis. (A) Computation of the section 481(a) adjustment.(B) Computation of basis adjustments.§ 1.59A-4Modified taxable income.(b) Computation of modified taxable income. (2) Modifications to taxable income. (i) Base erosion tax benefits.(ii) Certain net operating loss deductions.(3) Rule for holders of a residual interest in a REMIC.(c) Examples. (1) Example 1: Current year loss. (2) Example 2: Net operating loss deduction. § 1.59A-5Base erosion minimum tax amount. (b) Base erosion minimum tax amount. (2) Calculation of base erosion minimum tax amount.(3) Credits that do not reduce regular tax liability.(i) Taxable years beginning on or before December 31, 2025.(ii) Taxable years beginning after December 31, 2025.(c) Base erosion and anti-abuse tax rate.(1) In general.(ii) Calendar years 2019 through 2025.(iii) Calendar years after 2025.(2) Increased rate for banks and registered securities dealers. (ii) De minimis exception to increased rate for banks and registered securities dealers.(3) Application of section 15 to tax rates in section 59A.(ii) Change in tax rate pursuant to section 59A(b)(1)(A).(iii) Change in rate pursuant to section 59A(b)(2).§ 1.59A-6Qualified derivative payment.(b) Qualified derivative payment. (2) Reporting requirements. (ii) Failure to satisfy the reporting requirement.(iii) Reporting of aggregate amount of qualified derivative payments.(iv) Transition period for qualified derivative payment reporting.(3) Amount of any qualified derivative payment.(ii) Net qualified derivative payment that includes a payment that is a base erosion payment.(c) Exceptions for payments otherwise treated as base erosion payments.(d) Derivative defined. (2) Exceptions. (ii) Insurance contracts.(iii) Securities lending and sale-repurchase transactions.(A) Multi-step transactions treated as financing.(B) Special rule for payments associated with the cash collateral provided in a securities lending transaction or substantially similar transaction.(C) Anti-abuse exception for certain transactions that are the economic equivalent of substantially unsecured cash borrowing.(3) American depository receipts.(e) Examples. (1) Example 1: Notional principal contract as QDP.(2) Example 2: Securities lending anti-abuse rule.§ 1.59A-7Application of base erosion and anti-abuse tax to partnerships. (b) Application of section 59A to partnerships.(c) Base erosion payment.(1) Payments made by or to a partnership.(2) Transfers of certain property.(3) Transfers of a partnership interest.(ii) Transfers of a partnership interest by a partner.(iii) Certain issuances of a partnership interest by a partnership.(iv) Partnership interest transfers defined.(4) Increased basis from a distribution.(5) Operating rules applicable to base erosion payments.(i) Single payment characterized as separate transactions.(ii) Ordering rule with respect to transfers of a partnership interest.(iii) Consideration for base erosion payment or property resulting in base erosion tax benefits.(iv) Non-cash consideration.(v) Allocations of income in lieu of deductions.(d) Base erosion tax benefit for partners. (2) Exception for base erosion tax benefits of certain small partners.(e) Other rules for applying section 59A to partnerships.(1) Partner's distributive share.(2) Gross receipts. (ii) Foreign corporation.(3) Registered securities dealers.(4) Application of sections 163(j) and 59A(c)(3) to partners.(f) Foreign related party.(g) Examples. (2) Examples. (i) Example 1: Contributions to a partnership on partnership formation.(ii) Example 2: Section 704(c) and remedial allocations.(iii) Example 3: Sale of a partnership interest without a section 754 election.(iv) Example 4: Sale of a partnership interest with section 754 election. (v) Example 5: Purchase of depreciable property from a partnership.(vi) Example 6: Sale of a partnership interest to a second partnership. (vii) Example 7: Distribution of cash by a partnership to a foreign related party.(viii) Example 8: Distribution of property by a partnership to a taxpayer.(ix) Example 9: Distribution of property by a partnership in liquidation of a foreign related party's interest. (x) Example 10: Section 704(c) and curative allocations.§ 1.59A-9Anti-abuse and recharacterization rules. (b) Anti-abuse rules. (1) Transactions involving unrelated persons, conduits, or intermediaries.(2) Transactions to increase the amount of deductions taken into account in the denominator of the base erosion percentage computation.(3) Transactions to avoid the application of rules applicable to banks and registered securities dealers.(4) Nonrecognition transactions.(5) Transactions involving derivatives on a partnership interest.(6) Allocations to eliminate or reduce a base erosion payment.(c) Examples. (2) Example 1: Substitution of payments that are not base erosion payments for payments that otherwise would be base erosion payments through a conduit or intermediary. (3) Example 2: Alternative transaction to base erosion payment.(4) Example 3: Alternative financing source. (5) Example 4: Alternative financing source that is a conduit.(6) Example 5: Intermediary acquisition. (7) Example 6: Offsetting transactions to increase the amount of deductions taken into account in the denominator of the base erosion percentage computation.(8) Example 7: Ordinary course transactions that increase the amount of deductions taken into account in the denominator of the base erosion percentage computation. (9) Example 8: Transactions to avoid the application of rules applicable to banks and registered securities dealers. (10) Example 9: Transactions that do not avoid the application of rules applicable to banks and registered securities dealers.(11) Example 10: Acquisition of depreciable property in a nonrecognition transaction.(12) Example 11: Transactions between related parties with a principal purpose of increasing the adjusted basis of property.§ 1.59A-10Applicability date. (a) General applicability date.T.D. 9910, 85 FR 64340 , Oct. 9, 2020 T.D. 9885, 84 FR 67017 , 12/6/2019; 85 FR 64360 , 12/8/2020