The U.S. Treasury Department and IRS on December 2, 2019, released final regulations related to the determination of the foreign tax credit (“FTC”) that finalize the proposed regulations published on December 7, 2018 (“2018 proposed regulations”).
The final regulations (T.D. 9882) were released by Treasury and the IRS prior to being released by the Federal Register. Read the final regulations [PDF 1.52 MB] (386 pages).
The final regulations provide guidance related to determining the FTC, including guidance related to changes made by the 2017 U.S. tax law (Pub. L. No. 115-97, enacted December 22, 2017, and often referred to as the “Tax Cuts and Jobs Act” or “TCJA”). The final regulations also finalize the proposed regulations related to overall foreign losses that were published on June 25, 2012, and finalize portions of the proposed regulations related to a U.S. taxpayer’s obligation to notify the IRS of a foreign tax redetermination published on November 7, 2007, which were issued in conjunction with temporary regulations.
In addition to the final regulations, Treasury and the IRS also issued proposed regulations (REG-105495-19) that provide additional guidance relevant to FTCs, including with respect to the allocation and apportionment of research and experimentation (R&E) and stewardship expenses, foreign tax redeterminations under section 905(c), and base and timing differences. Read the proposed regulations [PDF 939 KB] (220 pages).
Read a printable version [PDF 545 KB] of this report
A number of features of the final regulations are noteworthy:
Initial impressions of the proposed regulations are as follows:
CFC = controlled foreign corporation
GILTI = global intangible low-taxed income
FDII = foreign derived intangible income
R&E = research and experimentation
PTEP = previously taxed earnings and profits
E&P = earnings and profits
FTC = foreign tax credit
FDDEI = foreign derived deduction eligible income
DEI = deduction eligible income
OFL = overall foreign loss
SLL = separate limitation loss
ODL = overall domestic loss
SIC = standard industrial classification
QBU = qualified business unit
For more information, contact a tax professional with KPMG's Washington National Tax:
Kevin Brogan | +1 (202) 533-3425 | firstname.lastname@example.org
Kristen Gamboa | +1 (202) 533-4146 | email@example.com
Gloria LaBerge | +1 (713) 319-2000 | firstname.lastname@example.org
Chris Riccardi | +1 (404) 222-7187 | email@example.com
Danielle Rolfes | +1 (202) 533-3378 | firstname.lastname@example.org
Gary Scanlon | +1 (202) 533-4651 | email@example.com
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.