BTAX OnPoint: Final Dividend Deduction Rules Bring Clarity

Final regulations for the dividends-received deduction provide clarity and new examples, but generally follow proposed rules—despite public comments urging the IRS and Treasury for changes.

The IRS released the rules (T.D. 9909) on Aug. 21, along with proposed regulations (REG-124737-19) coordinating tax code Section 245A and the Section 951A global intangible low-taxed income (GILTI) provision on the disqualified basis rule.

The final regulations limit certain distributions and reductions that occur during the “disqualified period.” The disqualified period is the period beginning Jan. 1, 2018 and ends the last day of the last taxable ...