Treasury and the IRS on June 14, 2019, released temporary regulations aimed at preserving the “structure of the statutory scheme” on taxation of foreign earnings, including Section 965 toll charge, subpart F, global intangible low-taxed income (GILTI), and Section 245A dividends received deduction (DRD), as enacted by the 2017 tax reform act.
Taxpayers should review the impact of the regulations for financial reporting purposes for the period ending on June 30, considering the dates the regulations were finalized and that the rules are already effective.
If considering the sale of foreign subsidiaries, taxpayers should evaluate whether the Temporary Regulations (specifically, the ER rules) have a tax impact on such deals.
Taxpayers conducting due diligence of CFCs should evaluate historic transactions with respect to such CFCs and confirm relevant attributes (such as the existence of ED accounts).
Further, taxpayers should continue monitoring future guidance releases and tax legislation, as it is possible that there could be further guidance and statutory technical corrections in this area.