The IRS today released an advance version of Notice 2020-73 that announces that the IRS and Treasury Department intend to amend the regulations under section 987 to defer the applicability date of certain final regulations under section 987 and certain related final regulations by one additional year.
Read Notice 2020-73 [PDF 47 KB]
In December 2016, Treasury and the IRS released final regulations (“2016 final regulations”) along with temporary and proposed regulations (“2016 temporary regulations” and “2016 proposed regulations”) concerning the taxable income or loss of a taxpayer with respect to a “qualified business unit” (QBU) subject to section 987.
In May 2019, Treasury and the IRS revised and adopted Reg. sections 1.987-2T(c)(9), 1.987-4T(c)(2) and (f) (relating to combinations and separations of QBUs), and 1.987-12T (requiring the deferral of foreign currency gain or loss with respect to certain transactions) of the 2016 temporary regulations as final regulations (the "related 2019 final regulations”) and withdrew Reg. section 1.987-7T (providing a liquidation value methodology for allocating assets and liabilities of certain partnerships). Read TaxNewsFlash
In December 2019, the IRS issued Notice 2019-65 announcing that future guidance would defer the applicability date of the 2016 final regulations and the related 2019 final regulations by one additional year to tax years beginning after December 7, 2020. Read TaxNewsFlash
Notice 2020-73, released today, announces a further extension of the applicability date of the regulations so that the 2016 final regulations and the related 2019 final regulations will apply to tax years beginning after December 7, 2021.
For calendar-year taxpayers, the 2016 final regulations and the related 2019 final regulations would apply to the tax year beginning on January 1, 2022.
Notice 2020-73 includes a statement that the IRS and Treasury do not intend to amend the applicability date of Reg. section 1.987-12, which applies to transactions occurring on or after January 6, 2017.
According to Notice 2020-73:
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