US Treasury and the IRS, on July 9, 2020, released 295 pages of final regulations addressing the Deduction for Foreign-Derived Intangible Income and Global Intangible Low-Taxed Income (the Section 250 deduction) as enacted by the 2017 tax reform legislation. The Section 250 deduction generally provides taxpayers a deduction with respect to deemed intangible income earned from servicing foreign markets directly from the US or through controlled foreign corporations.
The Final Regulations modify the Proposed Regulations in several respects, including providing helpful additional guidance related to the documentation and substantiation requirements with respect to the Section 250 deduction, providing additional and more specific rules for applying the FDDEI sales and services rules to certain types of
transactions (including sales of intangible property and electronically provided sales and services), and addressing certain rules related to the computation of FDII and the Section 250 deduction.
