Companies Want IRS To Narrow Rules for Tracking Deductions

Companies are hoping the IRS will free them from a requirement to report the origin of certain deductions in a forthcoming anti-abuse tax package.

The agency could soon release final rules aimed at companies exploiting tax differences between jurisdictions, a tax-planning strategy known as a hybrid mismatch arrangement. Governments have tried to clamp down on hybrid structures following the Organization for Economic Cooperation and Development’s base erosion and profit shifting project.

Under the proposed version of the hybrid rules, which relate to tax code Sections 267A and 245A(e), companies must trace deductions back through several layers of entities, which ...