Biography
Sydnei Jones is an associate in Weil’s Tax Department and is based in Washington, D.C. Sydnei participates in the representation of Firm clients with respect to the tax aspects of a wide range transactions, including matters involving domestic and cross-border mergers and acquisitions, REITs, joint ventures, restructurings and financing transactions.
Sydnei has been a part of the teams advising:
- A major financial institution, as administrative agent and lead arranger, in a $1.25 billion senior unsecured revolving facility for Hasbro, Inc. and Hasbro SA
- CIBC Capital Markets, MUFG, RBC Capital Markets and TD Securities, as joint book-running managers and representatives of the underwriters, in a $1.3 billion investment grade bond offering by The Williams Companies, Inc.
- Citi, Truist, Wells Fargo and another financial institution, as representatives of the underwriters, in a $2.1 billion offering of senior notes by The Williams Companies, Inc.
- The dealer managers in a $3.65 billion exchange offer by Microsoft Corporation of new 144A / RegS unsecured senior notes and cash for unsecured notes of Activision Blizzard
- Diversified Healthcare Trust, a real estate investment trust in a $941 million offering of zero coupon senior secured notes due 2026
- Hayfin Capital Management, as lender, in its senior secured term and revolving facility for Covis Finco S.À R.L. and Covis US Finco, LLC
- JPMorgan Chase, as administrative and collateral agent, lead arranger and joint bookrunner, in its upsized $2.75 billion senior secured term and revolving facility for Clarios Global LP (a subsidiary of Brookfield Business Partners)
- Lineage Logistics, LLC in its $208 million acquisition of Turvo Inc.
- Office Properties Income Trust in its $300 million 144A/Reg S offering of 9.000% senior secured notes due 2029
- Ontario Teachers’ Pension Plan in $820 million first and second lien facilities to finance its acquisition of Vantage Elevator Solutions
- OUTFRONT Media, Inc., representing the initial purchasers, in a $450 million senior secured 144A/Reg S senior secured notes offering
- Susquehanna Growth Equity in its acquisition of a minority stake in Sawhorse Media LLC (d/b/a Muck Rack Software LLC)
- Trebia Acquisition Corp., a SPAC sponsored by affiliates of Trasimene Capital Management and Bridgeport Partners, in $450 million senior secured revolving and term facilities to finance its $1.4 billion business combination with System1, LLC and Protected.net Group Limited (together with Trebia n/k/a System1)
- WEX Inc. in its repurchase of $310 million in principal amount of its convertible senior notes from WP Bronco Holdings, LLC and its $1.4 billion incremental senior secured term and revolving facility
- Willis North America Inc. (a subsidiary of Willis Towers Watson PLC) in its $750 million senior unsecured notes offering
Sydnei is also actively involved in the Firm's pro bono efforts, including work with the Innocence Project. Sydnei is also the D.C. Co-chair for the U.S. Branch of the International Fiscal Association's (IFA) Young IFA Network (YIN).
Prior to joining Weil, Sydnei was Tax Counsel at 3M.
Sydnei received her LL.M and a Certificate in International Tax, with distinction, from Georgetown University Law Center, her J.D. from The University of Iowa College of Law and her B.A. from Mount St. Mary's University.
Awards and Recognition, Speaking Engagements, Guides and Resources, Latest Thinking, Firm News & Announcements
Latest Thinking
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New IRS Proposed Regulations Address Dual Consolidated Loss Rules
Blog Post — Tax Blog
— By
Devon Bodoh,
Greg Featherman,
Madeline Joerg and
Sydnei Jones
— August 09, 2024
On August 6, 2024, the Treasury Department (“Treasury”) issued Proposed Regulations (REG- 102144-04) (the “Proposed Regulations”) regarding section 1503(d) of the Internal Revenue Code. Specifically, the Proposed Regulations clarify the application of the existing dual consolidated loss (“DCL”) rules by providing guidance regarding: (i) the interplay of the DCL rules with the intercompany transaction regulations under section 1502, (ii) the computation of income or DCLs, (iii) the application of certain anti-avoidance rules, (iv) the interplay of the DCL rules with the GLoBE Model rules, and (v) the treatment of disregarded payment losses. Background – Overview of the DCL Rules. The DCL rules generally function by restricting “double deduction” outcomes, i.e., when a dual resident corporation (“DRC”) uses the same economic loss to offset income subject both to U.S. tax and taxation in a foreign jurisdiction. The double deduction issue commonly arises with respect to losses of an entity that is a flow-through owned by a domestic corporation for U.S. federal income tax (“USFIT”) purposes that is subject to income tax in a foreign jurisdiction (such entities generally referred to as “hybrid entities”). In the absence of the DCL regime, the hybrid nature of these entities would allow for the losses of such entities to be taken into account for both foreign and USFIT purposes. More specifically, section 1503(d)(2)(A) defines DCLs as “any net operating loss of a domestic corporation which is subject to an income tax of a foreign country on its income without regard to whether such income is from sources in or outside of such foreign country or is subject to such a tax on a residence basis.” Generally, the ability of a U.S. corporation to deduct DCLs are limited although statutory exceptions to the DCL rules allow for the domestic use of losses under special circumstances. These circumstances include situations in which a corporation certifies and demonstrates that it has not previously applied, and in the future will not apply, the losses to income generated in a foreign country (the “Foreign Use Exception”). The exceptions to the DCL rules apply so long as a triggering event does not occur. Clarifications to Current Regulations to Address Uncertainty. The following summarizes certain clarifications to the current DCL regulations that were included in the Proposed Regulations that were intended to address uncertainty as to the application of those regulations. Interaction with the Matching Rules. The existing DCL rules provide that, with respect to an affiliated DRC or an affiliated domestic owner acting through a separate unit (a “Section 1503(d) Member”), the computation of income or DCL takes into consideration the rules under section 1502 regarding the computation of consolidated taxable income. See Treasury Regulations sections 1.1503(d)-5(b)(1) and (c)(1). The Proposed Regulations generally address certain hybrid arrangements and the interaction of the matching rules under Treasury Regulations section 1.1502-13(c) with the computation of income or dual consolidation loss. In particular, the Proposed Regulations clarify that if a Section 1503(d) Member’s intercompany loss would otherwise be taken into account in the current tax year, and if the DCL rules apply to limit the use of such loss (such that the loss is not currently deductible), then the intercompany transaction regulations would not re-determine that loss as not being subject to limitations under section 1503(d). As a result, a Section 1503(d) Member’s intercompany loss may be limited under the DCL rules despite this outcome being inconsistent with single entity treatment under the consolidated return rules. The Proposed Regulations also generally provide guidance as to the treatment of a Section 1503(d) Member’s counterparty in an intercompany transaction. The Proposed Regulations apply matching rules, or principles of matching rules, to the counterparty as if such Section 1503(d) Member were not subject to the DCL rules. With respect to the order of operations between Treasury Regulations section 1.1502-13 and the DCL rules, the Proposed Regulations attempt to clarify that (i) the intercompany transaction regulations apply first to determine when an intercompany (or corresponding) item is taken into account, and (ii) such item is then included in the DCL computations. Weil Tax Observation: This is another example of the IRS and Treasury using a single entity approach to affiliated corporations and treating entities as separate. Eliminations of the Favorable Inclusion of Stock Rule. Many foreign jurisdictions do not tax capital gain or dividends under a “participation exemption” regime. Further, Subpart F or global intangible low-taxed income (“GILTI”) inclusions with respect to CFC stock is not a taxable event outside the U.S. To avoid taxpayers affirmatively structuring to prevent the application of the DCL rules (which may otherwise be possible as a result of the difference in tax law between the U.S. and other jurisdictions), the Proposed Regulations intend to provide that items generally arising from the ownership of stock are not taken into account for purposes of calculating DCLs. More specifically, Proposed Treasury Regulations section 1.1503(d)-5(c)(4)(iv) states that such exclusions, for the purposes of computing the income or the DCLs of any separate unit, include subpart F inclusions, GILTI inclusions, and most dividends. Note that the Proposed Regulations do not apply with respect to a dividend or other inclusion arising from a separate unit or from a DRC’s ownership of portfolio stock of a corporation. Weil Tax Observation: It is unclear why the IRS and Treasury felt the need to address these specific types of transactions with a per-se rule when it also granted itself broad authority under an anti-avoidance rule (described in more detail below). Adjustments to Conform to U.S. Tax Principles. With respect to items of a domestic owner that are attributed to a hybrid entity separate unit, taxpayers historically may have taken the position that such items, which are not reflected on the books and records of hybrid entity, may be attributable to the hybrid entity separate unit (i.e., the adjustments to the books and records necessary to conform to U.S. tax principles can include an item that has not been reflected on the books and records of the hybrid entity). To address this, the Proposed Regulations generally provide that the adjustments necessary to conform to U.S. tax principles do not permit the attribution to a hybrid entity separate unit (or an interest in a transparent entity) of any item that has not been, and will not be, reflected on the books and records of such hybrid entity (or transparent entity).Anti-avoidance Rules. The Proposed Regulations note that the IRS and Treasury continue to learn and are aware of certain transactions or structures that attempt to obtain a double-deduction outcome while avoiding the DCL rules. Therefore, the IRS and Treasury included in the Proposed Regulations an anti-avoidance rule that generally is expected to address additional transactions, or interpretations, that may attempt to avoid the purposes of DCL rules. Weil Tax Observation: The new anti-avoidance rule is very broad and should be approached with care. The rule authorizes “appropriate adjustments” where a transaction, series of transactions, or plan or arrangement is intended to avoid the purposes of the DCL rules. This is a continuation of broad anti-avoidance rules being inserted into IRS guidance. The Interplay of the DCL and GLoBE Model Rules Published in 2021, the OECD/G20 provided rules to assist in the reformation of international taxation, specifically aimed at global anti-base erosion (“GLoBE”). Generally, the rules prescribe a system in which Multinational Enterprise Groups (“MNE Groups”) are required to pay a 15% global minimum tax. MNE Groups must determine whether their effective tax rate (“ETR”) in each jurisdiction in which it operates is 15% by taking the sum of all the taxes paid by the MNE Group in a specific jurisdiction, covered taxes, and dividing it by the total amount of income derived from that specific jurisdiction, otherwise referred to as, Net GLoBE income. The Net GLoBE income of a specific jurisdiction is determined by aggregating the income and loss of all constituent entities of the MNE Group located in that jurisdiction. If the ETR of the MNE in a specific jurisdiction falls below the 15% threshold a qualified domestic minimum top-up tax (“QDMTT”), an income inclusion rule (“IIR”) or a undertaxed profits rule (“UTPR”) would be applied to ensure that the MNE Group meets the threshold in each specific jurisdiction. To ease the burden of compliance, the OECD implemented the Transitional CbCR Safe Harbor (“Safe Harbor”). Applicable to financial years beginning after December 30, 2023 and ending by June 30, 2028, the Safe Harbor provides that if certain test or requirements related to the ETR or financials of the entity based in a specific jurisdiction are met, the top-up tax will not apply. The QDMTT or IIR may be considered an Income Tax for DCL Purposes. The interplay of the DCL and the GLoBE Model rules hinges on determining what is considered an “income tax,” as described in the DCL rules. The Proposed Regulations clarify that under certain circumstances the QDMTT or IIR may qualify as an income tax under the DCL rules because the calculation of ETR can result in the double deduction of losses based on dual residence, the exact situation that the DCL rules were enacted to prevent. The Proposed Regulations assert that taxes collected to ensure the collection of a minimum tax or that use financial accounting to determine net income or loss may be an income tax as described in the DCL rules. It is important to note, the Proposed Regulations declined to provide specific guidance regarding the issues related to the UTPR. Weil Tax Observation: Over 135 jurisdictions agreed to enact legislation to prevent base erosion and profits shifting (BEPS). This foreshadows the administrative and compliance burden that taxpayers will face navigating international tax law in the coming future as it relates to the DCL rules. Particularly, tracking which top-up tax regimes are valid/applicable and varying implementation/application dates. Taxpayers are also left in anticipation regarding the views of the IRS and Treasury on the treatment of UTPRs. Demystifying Tax Residence. The Proposed Regulations state that if an entity that is not taxed as a domestic association for USFIT purposes is subject to the IIR in another jurisdiction, then the interest of such entity held by a domestic entity is considered a hybrid entity separate unit or an entity treated as separate from the domestic unit for USFIT purposes. Consequently, the income and losses of such entity would be calculated separately from the other entities in the group. The Proposed Regulations also clarify that if a MNE has a place of business outside the United States that is considered a permanent establishment with respect to a QDMTT or IIR, then the Proposed Regulations, subject to some exceptions, generally classify the foreign permanent establishment as separate from the domestic entity for USFIT purposes. Transitional Safe Harbor and the Foreign Use Exception. The Proposed Regulations clarify that the utilization of a loss to qualify for one of the test or requirements under the Safe Harbor is not appropriate where a DCL situation would have occurred in the absence of the Safe Harbor. Legacy DCLs and Notice 2023-80. Subject to the anti-abuse rule, the Proposed Regulations extend the relief provided by Notice 2023-80 by generally allowing the inapplicability of the DCL rules with respect to the GLoBE Model rules for DCLs incurred in taxable years that have already begun. Anti-Hybrid Rules. Treasury notes that they are still studying the interaction of the dual consolidated loss rules and the GloBE Model rules, particularly as it relates to the anti-hybrid rules under sections 245A(e) and 267A.Treatment of Disregarded Payment Losses The preamble to the 2018 proposed regulations (REG-104352-18) discussed certain structures involving payments from foreign disregarded entities to their domestic corporate owners that are regarded for foreign tax purposes but disregarded for USFIT purposes. Such structures may result in a deduction/no-inclusion outcome (“D/NI outcome”) (i.e., for foreign tax purposes, payments that give rise to a deduction that can be surrendered to offset dual inclusion income). However the preamble to the 2018 proposed regulations noted that such structures were not addressed in the section 1503(d) Treasury Regulations. Due to complexity, the Proposed Regulations address these structures through entity classification and DCL rules (the disregarded payment loss (“DPL”) rules) that are consistent with the “domestic consenting corporation” approach under Treasury Regulations sections 301.7701-3(c)(3) and 1.1503(d)-1(c) (addressing domestic reverse hybrid entities). As a result of these DPL rules, domestic corporations agree to monitor a net loss of the entity under a foreign law that is composed of certain payments that are disregarded for USFIT and, if a D/NI outcome occurs as to the loss, then such domestic corporation will include in gross income the amount equal to the loss. By including this amount in the domestic corporation’s gross income, it generally minimizes the D/NI outcome and places parties in generally the same position they would have been in had the specified eligible entities not been classified as a disregarded entity for USFIT purposes.Consent and DPL Rules. Additionally, with respect to DPL rules, the Proposed Regulations include a deemed consent rule. This rule, which applies 12 months after the date the DPL rules are applicable, provides that a domestic corporation, which directly or indirectly owns interests in a specified eligible entity, is deemed to consent to the applicability of the DPL rules to the extent such corporation has not otherwise consented. For purposes of the Proposed Regulations, a specified eligible entity is an entity that, when classified as a disregarded entity, is able to pay or receive amounts that may give rise to a D/NI outcome by reason of being disregarded for USFIT purposes but deductible for foreign tax purposes. By consenting, the domestic corporation agrees that if the specified eligible entity incurs a DPL during a certification period and a triggering event also occurs with respect to such loss, then such domestic corporation will include in gross income the DPL inclusion amount (the “DPL Inclusion Amount”). Items taken into account for purposes of calculating a DPL include any item that (i) is currently deductible under relevant foreign tax law, (ii) is disregarded for USFIT purposes and, (iii) if regarded for USFIT purposes, would be interest, a structured payment, or a royalty. Only items that are generated or incurred during a period in which an interest in the disregarded payment entity (“DPE”) is a separate unit are taken into account. By defining DPL amounts in this manner, the IRS and Treasury appear to be of the view that the application of this rule is generally intended to apply to arrangements that are likely structured to produce a D/NI outcome. Triggering Events. The Proposed Regulations provide triggering events that, if applicable, require the specified domestic owner to generally include in gross income the DPL Inclusion Amount. The first triggering event occurs when there is foreign use of the DPL. In determining if such foreign use occurs, only persons that are related to the specified domestic owner are taken into account. The IRS and Treasury intended to minimize the occurrence of a triggering event that results from non-tax motivated transactions. The second triggering event occurs as a result of a failure by the specified domestic owner to comply with certification requirements (generally, a specified domestic owner must file a statement providing information about the DPL of such entity and certifying that a foreign use of the DPL has not occurred). DPL Inclusion Amount. The Proposed Regulations define the DPL Inclusion Amount as, with respect to a DPL as to which a triggering event has occurred during the DPL certification period, the amount of the DPL. DPE Combination Rule. The Proposed Regulations also include a rule in which DPEs, which for relevant foreign tax purposes are the same, are generally combined and treated as a single DPE for purposes of the DPL rules. Application to DRCs. The Proposed Regulations provide certain special rules where the DPL rules also apply to DRCs, and where a DRC either directly or indirectly owns interests in an eligible entity treated as a disregarded entity, such DRC agrees to be treated as a DPE and as a specified owner of such DPE.Interaction with DCL Rules. Although the DPL rules address similar concerns, and rely on certain aspects of, DCL rules, according to the Proposed Regulations, the IRS and Treasury have not integrated these two regimes given the administrative complexity. The DPL rules operate independently of the DCL rules. ...
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Final Guidance on the Carryback of Consolidated Net Operating Losses
Blog Post — Tax Blog
— By
Devon Bodoh and
Sydnei Jones
— July 14, 2023
On July 10, 2023, the Treasury Department issued final regulations (T.D. 9977) regarding the application of the five-year extended net operating loss (NOLs) carryback period (retroactive statutory extension) enacted by the Coronavirus Aid, Relief and Economic Security Act (CARES Act). Under the CARES Act, NOLs generated in taxable years beginning after December 31, 2017 and before January 1, 2021 may be carried back to the five taxable years preceding the tax year in which the NOLs relate, as opposed to the previously permitted 2-year carryback period. Substantively consistent with the temporary regulations published in 2020, the final regulations permit consolidated groups that acquired new members from another consolidated group (acquiring group) prior to the enactment of the retroactive statutory extension to make one of two elections to waive all or part of the pre-acquisition carryback period if certain statutory conditions are met. The two elections include an: • Amended Statute Split-Waiver Election: The acquiring group may make an irrevocable election to waive the carryback period related to the pre-acquisition consolidated NOLs of the acquired member that relate to the retroactive statutory extension and the 2-year carryback period. Thus, the acquiring group has the ability to eliminate any refund attributable to the acquired member that may have been available to the former consolidated group. • Extended Split-Waiver Election: The extended split-waiver election is analogous to the amended statute split-waiver election except that it permits the acquiring group to irrevocably elect to waive only the carryback period attributable to the retroactive statutory extension. ...
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