IRS issued new regulations for translation in Sec. 986(c)
The IRS also issued new LB&I guidance addressing computation of Sec. 986(c) computations, attached for reference.
US T.D. 9909, Final Regulations, in coordination with the issuance of proposed regulations, REG-124737-19, addressing Sec. 245A and the exception to subpart F income under Sec. 954(c)(6). The final regulations address extraordinary dispositions and reductions.
The UK will drop its Digital Service Tax (DST) initiative, knowing it would only increase its stimulus by several hundred million dollars , while COVID-19 has set the country back hundreds of billions of dollars in stimulus. It will be interesting how other countries, who have adopted or are thinking about a unilateral DST, will react prior to the OECD Project addressing this in Pillar One.
The Final Reg’s for Section 250, used in FDII and GILTI calculations, have been finalized. These Reg’s are now undergoing analyses in trying to understand the complexities and nuances. Some highlights include:
The Final Reg’s are effective for tax years beginning on or after 1/1/2021, although they can be applied retroactively in their entirety
General relaxation of the FDII documentation requirements
Formal ordering rules for interaction with other Code sections are reserved in the Final Reg’s
Final Reg’s require deductions to be apportioned to gross DEI and gross FDDEI without regard to the limitations in Sections 163(j), 170(b)(2), 246(b) and 250k, that may cause a mismatch in the deductions allowable for taxable income
Final Reg’s apply the exclusive geographic apportionment rule of Treas. Reg. Section 1.861-17(b) for purposes of apportioning R&E expenses to gross DEI and gross FDDEI
The Final Reg’s provided additional clarity, although a taxpayer will have to consider if the Proposed Reg’s or Final Reg’s will be favorable for tax years prior to 2021.
EY’s Tax Alert provides additional details, as referenced.
Final and proposed Regulations were issued with respect to the Foreign Tax Credit and BEAT. Noting this regulation package collectively amounts to over 650 pages, it will require time and attention to webcasts, etc. to fully understand the breadth of these rules, especially as they may pertain to 2018 and/or 2019.