On Nov. 28, IRS, Treasury proposed rule on foreign tax credits.
- Follows 2017 Tax Cuts and Jobs Act (TCJA), legislation passed in December 2017.
- 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- Repealed fair market value method of asset valuation(sec. 864e2), added 904b4.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.