IRS Foreign-Derived Income Guidance Rewards US-Based Intangibles

Recent guidance released by the IRS on what kinds of foreign-earned income qualify for a highly lucrative tax deduction underscores Republicans’ goal of rewarding companies for keeping IP in the US, tax practitioners say.

The guidance is “very consistent with the policy we’ve seen in OBBBA as well as what was perhaps intended in the Tax Cuts and Jobs Act, which is rewarding and obtaining international intellectual property and other elements in the United States,” said Cory Perry, partner at Grant Thornton’s Washington National Tax Office, referring to the GOP’s 2025 and 2017 tax laws.

The IRS provided taxpayers ...