Final regulations (T.D. 9922) and proposed regulations (REG-101657-20) were published in the Federal Register on November 12, 2020, and relate to the determination of the foreign tax credit (FTC).
These final and proposed regulations are the third significant revision of the FTC regulations since enactment of the 2017 U.S. tax law (Pub. L. No. 115-97)—the law that was enacted December 22, 2017, and is often referred to as the “Tax Cuts and Jobs Act” (TCJA)—that made changes to the FTC rules. The prior major regulatory revisions were published in December 2018 and December 2019.
The 2020 final regulations finalize aspects of the proposed regulations (December 2019) generally without significant substantive changes but with certain exceptions. The 2020 final regulations provide guidance related to the allocation and apportionment of foreign taxes and other expenses for purposes of determining a taxpayer’s FTC limitation.
The 2020 proposed regulations contain newly proposed guidance, as well as re-proposed portions of the 2019 proposed regulations where Treasury and the IRS materially revised their approach and sought to afford taxpayers additional opportunity to comment. The 2020 proposed regulations re-propose certain rules relating to the allocation and apportionment of foreign income taxes, including with respect to foreign income taxes that arise in connection with disregarded payments. The 2020 proposed regulations also include or introduce:
Read a November 2020 report [PDF 751 KB] (70 pages) prepared by KPMG LLP: Analysis of final and proposed foreign tax credit regulations
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