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Coordinating section 245A “extraordinary disposition rule” with section 951A “disqualified basis rule”

Coordinating extraordinary disposition rule

The IRS today posted to its website a version of final regulations (T.D. 9934) that coordinate the “extraordinary disposition rule” under section 245A with the “disqualified basis rule” under section 951A—measures concerning the tax treatment of dividends received by U.S. persons and certain controlled foreign corporations (CFCs) pursuant to provisions of the 2017 tax law (Pub. L. No. 115-97) or the law that is often referred to as the “Tax Cuts and Jobs Act” (TCJA).

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The final regulations also reflect rules under section 6038 regarding certain information reporting requirements.

The final regulations [PDF 382 KB] (62 pages) finalize regulations that were proposed in August 2020, with certain revisions. Also, the version of the final regulations posted by the IRS today includes the following statement:

This document has been submitted to the Office of the Federal Register (OFR) for publication and will be pending placement on public display at the OFR and publication in the Federal Register. The version of the final rule released today may vary slightly from the published document if minor editorial changes are made during the OFR review process. The document published in the Federal Register will be the official document.

The purpose of this report is to provide text of the final regulations.

The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained 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.

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