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Treasury and IRS Release Final and Proposed Regulations under Section 245A

On August 21, the Department of the Treasury and the Internal Revenue Service released proposed and final regulations under section 245A.  Section 245A allows a 100% deduction to a corporate US shareholder for the foreign-source portion of dividends received from a specified 10% owned foreign corporation (SFC). The final regulations limit the deduction for certain dividends received by...

OIRA Completes Review of Final and Proposed Regulations under Section 245A

On August 7, the Office of Information and Regulatory Affairs (OIRA) completed its review of regulations finalizing temporary regulations issued last June related to the 100% deduction available to a corporate US shareholder for the foreign-source portion of dividends received from a specified 10% owned foreign corporation (SFC) under section 245A and the look-through rule under...

Treasury and the IRS Release Proposed and Final Regulations under Section 245A(e) and 267A

On April 7th, the Department of Treasury and the Internal Revenue Service released final and proposed regulations regarding hybrid arrangements under sections 245A(e) and 267A. Section 245A(e) generally limits the participation exemption deduction under section 245A or causes a dividend received by a controlled foreign corporation (CFC) to be included in subpart F income if a dividend...

IRS to Consider Relief from Double Taxation Related to Transition Tax

On January 17, the IRS announced that it was aware of certain circumstances under which a taxpayer may be subject to double taxation as a result of the so-called transition tax under section 965. For example, where a corporation paid an unusual dividend for business reasons, double taxation may result if the same E&P of the foreign corporation are taxed both as dividends and under...

IRS LB&I Division Announces Section 965 Compliance Campaign

On November 4, the IRS Large Business and International Division (LB&I) announced a new compliance campaign directed at promoting compliance with section 965. Section 965, enacted by the Tax Cuts and Jobs Act, generally imposes a transition tax on a US shareholder’s pro rata share of the accumulated earnings and profits of certain foreign corporations. The LB&I campaign will...

IRS Working to Address Double-Gain-Recognition Issue in Final GILTI Regulations and Temporary Section 245A Regulations

Speaking at an event on September 4, John Merrick, senior-level counsel to the IRS associate chief counsel (international), stated that the IRS is aware that the interaction between the anti-avoidance rules of section 245A (the participation exemption deduction) and section 951A (global intangible low-taxed income, GILTI) could result in double gain recognition for taxpayers and is...

Treasury Releases Final and Proposed GILTI Regulations and Temporary Section 245A Regulations

On June 14, Treasury and the IRS (the Service) released final and proposed regulations on the new global intangible low-taxed income provisions, or GILTI, that were introduced under the Tax Cuts and Jobs Act. Along with finalizing regulations related to determining a US shareholder’s GILTI inclusion and their pro rata share of a CFC’s subpart F income, the regulations also address the...

OIRA Receives Final Transition Tax Regulations for Review

On December 6, the Office of Information and Regulatory Affairs (OIRA) received final regulations under section 965, the so-called transition tax. OIRA will have 45 days to review the regulations, as they are not designated for expedited review. The Treasury Department has previously stated that the final regulations will provide additional detail regarding ordering rules for...

LB&I Division Announces Campaign Targeting Transition Tax Compliance

On July 2, 2018, the Internal Revenue Service’s Large Business and International Division announced a compliance campaign focused on the transition tax provisions of section 965, enacted by the 2017 Tax Act. Section 965 generally requires that U.S. shareholders pay a tax on the untaxed foreign earnings of certain specified foreign corporations. The compliance campaign serves as a...

Proposed Regulations Related to Previously Taxed Income (PTI) Are Expected This Year

Marjorie Rollinson, IRS Associate Chief Counsel International, has indicated that issuing new proposed PTI regulations is a priority for the IRS this year. The new PTI regulations would address issues related to the global intangible low-taxed income (GILTI) and deemed repatriation provisions of the Tax Cuts and Jobs Act, specifically, how to allocate deductions against tested income...

IRS Releases Guidance on Section 965

On April 2, 2018, the IRS issued Notice 2018-26, which describes additional regulations to be promulgated under Section 965. The regulations will provide anti-avoidance rules under the authority granted by the statute, provide an exception to the treatment of a foreign corporation as a specified foreign corporation (SFC) in connection with the downward attribution of stock through a...

Treasury Considering Treatment of Foreign Taxes Under Transition Tax

Under the new Tax Act, U.S. shareholders are charged a one-time tax on deferred foreign earnings of their foreign subsidiaries; these earnings and profits are measured as of November 2 if the amount is greater than on December 31.  Taxpayers have brought to Treasury’s attention that the use of the November 2 date can result in an overstatement of earnings because foreign taxes...

IRS Releases Guidance on the Transition Tax Provision

Last week, the IRS released Notice 2018-07 (the “Notice”), which provides guidance on calculating the so-called “transition tax” of the Tax Cuts and Jobs Act. While the Notice itself does not contain any specific regulations, it does describe the regulations that the IRS plans to issue at a later date, including guidance on the effects that the future regulations will have. The Notice...

Administration Official States that Repatriation Tax Will Be in the 10% Range

National Economic Council Director Gary Cohn stated on Sunday that the Trump administration has proposed taxing profits accumulated offshore in the “10 percent range.” The tax reform framework released on September 27 stated that there would be two rates for the repatriation tax, with cash taxed at a higher rate than illiquid assets, but did not specify an amount. Cohn did not indicate...

GOP Releases Tax Reform Framework

The White House and Congressional Republicans have released the Unified Framework for Fixing Our Broken Tax Code. The goals for the Framework, which is described as a template for the tax-writing committees, include providing tax relief for the middle class; simplifying the tax filing process; providing tax relief for businesses (with an emphasis on small businesses); ending incentives...


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