26 U.S.C. § 267A: Certain related party amounts paid or accrued in hybrid transactions or with hybrid entities

No deduction shall be allowed under this chapter for any disqualified related party amount paid or accrued pursuant to a hybrid transaction or by, or to, a hybrid entity. such amount is not included in the income of such related party under the tax law of the country of which such related party is a resident for tax purposes or is subject to tax, or such related party is allowed a deduction with respect to such amount under the tax law of such country. The term “related party” means a related person as defined in section 954(d)(3), except that such section shall be applied with respect to the person making the payment described in paragraph (1) in lieu of the controlled foreign corporation otherwise referred to in such section. For purposes of this section, the term “hybrid transaction” means any transaction, series of transactions, agreement, or instrument one or more payments with respect to which are treated as interest or royalties for purposes of this chapter and which are not so treated for purposes the tax law of the foreign country of which the recipient of such payment is resident for tax purposes or is subject to tax. treated as fiscally transparent for purposes of this chapter but not so treated for purposes of the tax law of the foreign country of which the entity is resident for tax purposes or is subject to tax, or treated as fiscally transparent for purposes of such tax law but not so treated for purposes of this chapter. rules for treating certain conduit arrangements which involve a hybrid transaction or a hybrid entity as subject to subsection (a), rules for the application of this section to branches or domestic entities, rules for treating certain structured transactions as subject to subsection (a), rules for treating a tax preference as an exclusion from income for purposes of applying subsection (b)(1) if such tax preference has the effect of reducing the generally applicable statutory rate by 25 percent or more, rules for treating the entire amount of interest or royalty paid or accrued to a related party as a disqualified related party amount if such amount is subject to a participation exemption system or other system which provides for the exclusion or deduction of a substantial portion of such amount, rules for determining the tax residence of a foreign entity if the entity is otherwise considered a resident of more than one country or of no country, cases in which the disqualified related party amount is taxed under the laws of a foreign country other than the country of which the related party is a resident for tax purposes, and other cases which the Secretary determines do not present a risk of eroding the Federal tax base, 1 1 So in original. Probably should be followed by “and”. requirements for record keeping and information reporting in addition to any requirements imposed by section 6038A.