Companies Get Reprieve from Foreign Dividends Double Tax Hit (2)

Companies won’t be taxed twice on dividends earned during a gap in effective dates of two international provisions.

The relief fixes an over-correction Treasury made in 2019, which targeted structured transactions potentially aimed at exploiting the gap in guidance. Without the provisions, those transactions would have effectively faced a double tax—denied a deduction on one side of the transaction and facing higher taxable income on the other side.

The final rules, (T.D. 9934, RIN 1545-BP57) released Friday, broadly adopt the relief measures proposed in August 2020. The fix is relevant for fiscal-year controlled foreign corporations, which are ...