IRS Foreign Tax Credit Regulations and Recent Guidance: Income-Sourcing Standard, Digital Service Taxes, FDII

In 2022, the U.S. Treasury Department and the IRS released final regulations and guidance concerning determining allowable foreign tax credits, allocating those tax credits, income-sourcing standards, and clarification on other vital issues. These regulations and recent guidance are critical to foreign tax planning and compliance, requiring tax practitioners to align planning methods with the new rules.

The final regulations guide practitioners on many technical issues for applying for the foreign tax credit. The final rules provide clarity on critical issues. Others need further guidance, such as (1) ensuring that the modified income-sourcing standards align with taxpayer's current tax compliance and planning methods; (2) sourcing of inclusions under Sections 951, 951A, and 1293; and (3) rules for the allocation and apportionment of certain expenses and for assigning foreign income taxes to different income groups for various purposes.

These final regulations are critical to U.S. taxpayers applying the foreign tax credit and resolving foreign tax audits.

Listen as our panel discusses the final regulations and guidance for the foreign tax credit, tax planning for foreign income, the allocation of expenses, assigning foreign taxes to baskets and income groups, rules relating to FDII, sourcing of inclusions under Sections 951, 951A, and 1293, and other essential issues.

1. Key provisions of the IRS final FTC regulations and guidance
2. Challenges in allocating and assigning foreign taxes to baskets and income groups
3. Sourcing of inclusions under Sections 951, 951A, and 1293
4. Pitfalls to avoid and effective tax planning tactics in light of final regulations

The panel will review these and other key issues:

• What are the critical provisions of the IRS final regulations impacting foreign tax planning?
• What are the key provisions of IRS guidance?
• What issues do the final regulations leave unresolved?
• What are the challenges of allocating and assigning foreign taxes to baskets and income groups?
• What are the issues associated with foreign tax redeterminations and methods to overcome them?
• What are the issues associated with sourcing inclusions under Sections 951, 951A, and 1293?

Learning Objectives

After completing this course, you will be able to:

• Identify changes to FTC rules under the IRS final regulations
• Recognize the treatment of GILTI and FDII under the IRS final FTC regulations
• Identify challenges in allocating and assigning foreign taxes to baskets and income groups
• Recognize critical issues for sourcing of inclusions under Sections 951, 951A, and 1293

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite: Three years+ business or public firm experience at mid-level within the organization, preparing complex tax forms and schedules, supervising other preparers/accountants. Working knowledge and understanding of foreign tax credits, Form 1116, elections available to foreign taxpayers for taxpayers with foreign income and taxes and sourcing rules; familiarity with 901 creditable foreign taxes and deemed paid taxes.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).