Corporate Loss Deduction Hangs in Balance Under Global Tax Deal

US multinational companies may lose the ability to deduct up to hundreds of millions of dollars’ worth of losses incurred from their income starting this year under the new global minimum tax.

The loss in deduction can arise from the interaction of the 15% minimum tax rules, known as Pillar Two, and US rules that prevent companies from “double dipping"—getting deductions on losses in the US and another jurisdiction on the same income.

The IRS hasn’t announced how it will rule on the issue. But tax practitioners say the agency could deem a simplified global minimum tax calculation—the so-called country-by-country ...