IRS Notice: Foreign Tax Allocation Rules for Specified Foreign Corporations (IRC §898)

The IRS has published a notice announcing proposed regulations under the One, Big, Beautiful Bill Act that repeal the one-month deferral election for specified foreign corporations under I.R.C. §898(c)(2). The notice provides interim guidance on allocating foreign income taxes between a corporation’s first required year and succeeding taxable year to prevent timing mismatches that could result in foreign taxes not being deemed paid under I.R.C. §960. The notice also announces modifications to I.R.C. §987 regulations regarding the recognition of pretransition gain or loss over the transition period, particularly for short taxable years. Taxpayers may rely on these rules before the ...