The IRS issued Notice 2014-44 on July 21, announcing that
Treasury and the IRS intend to issue regulations addressing the
application of Section 901(m) to disposition of assets following
covered asset acquisitions (CAAs) and to CAAs consisting of the
acquisition of an interest in a partnership that has an election in
effect under Section 754.
Following a CAA, Section 901(m) limits foreign tax credits that
are available to a taxpayer to the extent there is a basis
difference in the acquired foreign entity's relevant foreign
assets (assets that can be attributed to the foreign entity at the
time of the CAA). However, Section 901(m)(3)(B)(ii) provides that,
except as otherwise provided by the Treasury Department, the
disposition of a relevant foreign asset (RFA) will generally cause
any remaining basis difference that can be attributed to the RFA to
be allocated to the year of the disposition (and thus not limit
foreign tax credits in future years).
