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Final Regs Tweak Safe Harbor for Partnership Allocations of Creditable Foreign Tax Expenditures
September 30, 2011

The final regulations—

  • clarify the effect of Code Sec. 743(b) adjustments on the determination of net income in a CFTE category;
  • include special rules regarding how deductible allocations (that is, allocations that give rise to a deduction under foreign law) are taken into account for purposes of determining net income in a CFTE category;
  • include special rules regarding how nondeductible guaranteed payments (that is, guaranteed payments that do not give rise to a deduction under foreign law) are taken into account for purposes of determining net income in a CFTE category; and
  • include a clarification of the rules regarding the treatment of disregarded payments between branches of a partnership for purposes of determining income attributable to an activity included in a CFTE category.
A transition rule applies to partnerships whose agreements were entered into before February 14, 2012.


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