Notice 2021-59, released on 12 October, states that Treasury and the IRS plan to defer the applicability dates of certain final Section 987 regulations and certain related regulations by an additional year, now to tax years beginning after 7 December 2022. These regulations already had been deferred under prior Notices, including most recently under Notice 2020-73 to tax years beginning after 7 December 2021.
Action item: According to Notice 2021-59, the 2016 final regulations and the related 2019 final regulations will apply to tax years beginning on January 1, 2023 for calendar-year taxpayers. Prior to the applicability date, taxpayers should comply with the Section 987 statute using a reasonable method, consistently applied, and consider the impact of Treas. Reg. sec. 1.987-12, which is final and effective, on transfers and terminations of Section 987 ‘qualified business units’ (QBUs).