As Final Regulations are in process, TEI’s practical and thoughtful comments were submitted re: the proposed Section 250 Regulations. A copy of the comments are provided for reference, with highlights including:
- Determination of domestic and foreign use are impractical rules for which a multinational company will find difficult to effectively implement. A seller’s shipping address would be an alternative solution
- Long-term supply contracts may be difficult to obtain new documentation annually, thus such documentation of the initial contract should suffice
- Business Service provisions have rules that will prove difficult to obtain, workable rules should be designed and implemented
- Effective date of the final regulations should be tax years beginning at least one year after the date of publication, to allow time for system changes
- Final section 250 regulations should provide that the exploitation of manufacturing and supply chain IP is a foreign used service, consumed at the place of manufacture, if it meets the physical transformation and proximity requirements outlined in the regulations
- Advance payments of section 451 are to be related to the timing for related cost of goods sold amounts to prevent distortion
Final regulations clarify where the charitable contribution deduction limitation fits in the ordering rule, along with sections 163(j), 172, and 250.
- Prop. Treas. Reg. § 1.250(b)-1(d)(2) provides that the exclusive apportionment rules in Treas. Reg. § 1.861–17(b) do not apply, this provision is a disincentive and should be changed
TEI’s comments are informative, especially due to the inclusion of suggested alternatives to the proposed rules and therefore worth reviewing.
Click to access tei_comments_-_proposed_section_250_regulations_-_final_to_irs_treasury_6_may_2019.pdf
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