IRS Consolidated Loss Rules Seen Raising Corporate Tax Bills

Multinational companies will see a jump in their US effective tax rates if the Treasury Department doesn’t make changes to its new foreign loss rules, which tax professionals say try to adopt European standards without congressional authorization.

The government has proposed dual consolidated loss regulations that, if finalized, will require corporations to change the way they include certain forms of foreign income, like stock, in their tax calculations. The changes would create more losses abroad that companies wouldn’t be able to deduct from their US income.

The proposed regulations also change the US tax treatment of certain royalty and interest ...