Final regulations limit transactions viewed as FTC generators

July 2011


Recently, the IRS has targeted certain categories of tax planning techniques, seeking to limit perceived abuses. One of those categories involves transactions sometimes termed “foreign tax credit generators,” that is, transactions or structures that the IRS and Treasury view as designed primarily to generate U.S. foreign tax credits out of proportion to the economic profits earned and actual foreign taxes paid. On July 13, 2011, the IRS finalized temporary regulations issued in 2008 intended to address certain types of FTC generators.

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