Treasury May Fix Expense Allocation for Foreign Tax Credit Rules

Treasury could soon release foreign tax credit rules that address expense allocation issues hitting companies that undertake certain kinds of offshore spending.

Companies are concerned that stewardship expenses—spending that protects overseas investments—could erode the foreign tax credits available to offset U.S. taxes. The issue is most important for multinationals with multiple subsidiaries across different jurisdictions.

The White House Office of Information and Regulatory Affairs is now reviewing final rules and a new proposed package related to foreign tax credits. White House review is the final step before rules are released.

In Dec. 2 proposed guidance (REG-105495-19), the IRS ...