US IRS New Foreign Tax Credits

On Nov. 28, IRS, Treasury proposed rule on foreign tax credits.

  • Follows 2017 Tax Cuts and Jobs Act (TCJA), legislation passed in December 2017.

Foreign Credits

  • Made major changes to internal revenue code, on how US taxes foreign activity.
  • Proposed tax credits for businesses, individuals, to allocate, apportion expenses.
  • Repealed fair market value method of asset valuation(sec. 864e2), added 904b4.
  • New provisions included dividends-received deductions from foreign subsidiaries.


  • Added global intangible low-taxed income rules, deferred under the previous law.
  • Modified how US taxpayers offset taxes, by foreign income taxes paid or accrued.
  • How taxable income is calculated, by disregarding of expenses related to income
    eligible for dividends-received deduction, repeal use of fair market value method.


  • The new foreign tax credit rules will become applicable to 2018, and future years.