Deference Provided to Regulations When There’s a Drafting Error

The Tax Act created two new foreign tax credit limitation baskets – one for foreign branch income (new section 904(d)(1)(B)) and one for any amount includible in gross income under section 951A (i.e., GILTI) – however, it failed to amend section 904(d)(2)(H)(i) to reflect these changes to section 904(d)(1). As a result of this oversight, section 904(d)(2)(H)(i) currently instructs the taxpayer to treat foreign taxes imposed on amounts that do not constitute income under US principles as imposed on income described in the foreign branch income basket. In light of legislative history and Treasury regulations, such a failure to amend the Code appears to be a drafting error. This article addresses the relevant case law that, on balance, supports applying section 904(d)(2)(H)(i) as if its language and cross-reference had been properly amended.

Access the full article.

K. Christy Vouri-Misso
  K. Christy Vouri-Misso focuses her practice on all stages of complex federal tax controversies including Internal Revenue Service (IRS) examinations, administrative appeals, voluntary disclosures, and litigation. She has settled multiple tax disputes with IRS legal counsel avoiding costly litigation in court. Read K. Christy Vouri-Misso's full bio.


McDermott Will & Emery



STAY CONNECTED

TOPICS

ARCHIVES