The US Internal Revenue Service (IRS) and Treasury Department have issued proposed regulations (REG-105479-18) on 2 December 2024, addressing previously taxed earnings and profits (PTEP) of foreign corporations and the associated basis adjustments.
The proposed regulations affect foreign corporations with previously taxed earnings and profits and their shareholders.
Comments on the proposed regulations and requests for a public hearing must be submitted within 90 days of their publication in the Federal Register, currently scheduled for 2 December 2024.
Commenters are strongly encouraged to submit public comments electronically. Submit electronic submissions via the Federal eRulemaking Portal at www.regulations.gov by following the online instructions for submitting comments. Requests for a public hearing must be submitted as prescribed in the “Comments and Requests for a Public Hearing” section.
The proposed regulations outline guidelines that address key elements of the PTEP system, including provisions that:
- Resolve issues under sections 959 and 961;
- Address new provisions and amendments from the Tax Cuts and Jobs Act (TCJA);
- Implement guidance from Notices 88-71 and 2019-01 on PTEP accounts and foreign currency gains and losses concerning PTEP.
The proposed regulations generally apply to tax years of foreign corporations beginning on or after the date the proposed regulations are finalised and to tax years of related persons.
