Treasury and the IRS, on December 2, 2019, released final regulations (the Final Regulations) under Sections 861, 901, 904, 905, 954, 960, 965, and 986, and proposed regulations (the New Proposed Regulations) under Sections 704, 861, 904, 905, 954, 960, 965, 1502, 6227, and 6889. The Final Regulations provide guidance with respect to the foreign tax credit (FTC) regime under the 2017 tax reform legislation (the Act). Various effective dates apply under the Final and New Proposed Regulations.
The Final Regulations provide needed guidance related to the mechanics of determining the FTC limitation under Section 904 (including the allocation and apportionment of expenses), the scope of the new foreign branch basket, the extent of deemed-paid FTCs with respect to subpart F and GILTI inclusions, certain aspects of foreign tax redeterminations, and other FTC issues.
We will discuss the latest FTC guidance in a Tax Readiness Series webcast. You can register here.