IRS Plans Guidance on Computing Pro Rata Share of Foreign Income

The IRS is working on guidance that will address the substance of a new approach to how companies calculate their share of subsidiaries’ foreign income, an agency official said Thursday.

The agency is “actively working on implementing regulations” for the change to the way companies include their pro rata share of a controlled foreign corporation’s Subpart F income as part of their own income, said Mallory Mendrala, a senior technical reviewer in the IRS Office of Chief Counsel. The change was included in the giant tax-and-spending law enacted in July.

There are still questions on the approach to determining ...