Tech companies may choose to move intellectual property to offshore subsidiaries to sidestep onerous documentation requirements needed to qualify for an export tax break.

U.S. companies that sell software are eligible for a tax deduction on income the 2017 tax law created—foreign-derived intangible income (FDII)—as long as the sale is proven to be to a foreign person for foreign use, according to rules the IRS has proposed.

The exporting company has to verify to the Internal Revenue Service that the sale is for foreign use. But the purchasing company might be unwilling to divulge details about...