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Temporary regs address Section 245A loophole

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Tax Hot Topics newsletter The IRS has released temporary regulations (REG-106282-18) under Sections 245A and 954(c)(6) that limit gap-year and other planning strategies the IRS said used the dividends-received deduction (DRD) contrary to the legislative intent. They apply to transactions occurring after Dec. 31, 2017, and deny in whole or in part the Section 245A DRD or the Section 954(c)(6) exception to foreign personal holding company income. The regulations also prevent fiscal-year taxpayers from exploiting Section 245A due to a mismatch in the effective dates of the new legislation by applying Section 245A against income that should have been subject to tax under the global intangible low taxed income regime (GILTI) under Section 951A or otherwise subject to U.S. tax.

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Contacts:
David Sites
Partner
Washington National Tax Office 
T +1 202 861 4104

David Zaiken
Managing Director
Washington National Tax Office 
T +1 202 521 1543

Cory Perry
Senior Manager
Washington National Tax Office 
T +1 202 521 1509

Mike Del Medico
Manager
Washington National Tax Office 
T +1 202 521 1522

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