The US IRS and Treasury on August 21 published final regulations (T.D. 9909) on limitations to the deduction for dividends received from foreign corporations and on the exception to subpart F income under section 954(c)(6) for certain dividends received by controlled foreign corporations.
The final regs replace temporary (TD 9865) and proposed (REG-106282-18) regs issued on June 18, 2019, They reflect changes to the US international tax system in the Tax Cuts and Jobs Act, enacted on December 22, 2017.
According to the government, the final regulations retain the general approach and structure of the proposed regulations, with certain revisions.
The preamble to the 2019 regulations solicited comments regarding whether the IRS and Treasury should coordinate the extraordinary disposition rule under section 245A with section 1.951A-2(c)(5) regarding the allocation of deduction or loss attributable to disqualified basis under the global intangible low-taxed income (GILTI) rules. The government has now issued proposed regulations regs (REG-124737-19) on that topic, after considering the comments received.
The IRS and Treasury said that future guidance will take into consideration comments to the final regs regarding the availability of the section 245A deduction for dividends received by a controlled foreign corporation.
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