Treasury and the IRS on December 2 released 343 pages of Final Regulations and 59 pages of Proposed Regulations for the Base Erosion and Anti-Abuse Tax (BEAT) under Section 59A as enacted by the 2017 tax reform legislation. The BEAT rules require certain corporations to pay a minimum tax on taxable income as computed without certain deductions for certain payments to foreign related parties.
The Final Regulations provide additional guidance related to the mechanics of determining a taxpayer’s BEAT liability, and clarify the application of Section 59A to partnerships, banks, registered security dealers, and US consolidated groups. The Final Regulations also provide an anti-abuse rule that generally disregards certain transactions undertaken with a principal purpose of avoiding Section 59A. Taxpayers should review and assess the impact of the provisions in the Final and Proposed Regulations.