Treasury Plans Regs on Transition Rule for Foreign Dividends (1)

The Treasury Department and the IRS intend to issue proposed regulations regarding the transition rule for treatment of certain dividends received by taxpayers from their foreign subsidiaries.

The agencies indicated their plans in a notice (Notice 2025-75) issued Thursday.

The planned regulations stem from a change in the tax-and-spending law enacted in July on how dividends received from controlled foreign corporations are treated. CFCs are foreign corporations that are more than 50%-owned by US shareholders.

The tax-and-spending law enacted this year revised the rules for treatment of Subpart F income under Section 951—passive income like dividends and ...