IRS Sends Statutory Frankenstein to Take Your §250 Deductions

GLAM 2024-002 introduces the IRS’s position that it may use §246(b) to disallow some of a taxpayer’s §250 deductions (i.e., FDII and GILTI deductions) during years in which the taxpayer has profitable foreign operations but otherwise unprofitable US operations. Some taxpayers are already beginning to explore options to combat the GLAM’s interpretation of §246(b).

Before the GLAM was issued, many taxpayers thought that their §250 deductions would only be disallowed under §250(a)(2)—i.e., to the extent that the taxpayer’s combined GILTI and FDII inclusions exceeded its taxable income. They did not think that a provision in a section titled, ...