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ARTICLE · 04 JANUARY 2023

IRS Issues Proposed Regulations On Section 951(a)(2)(B) Planning

Freeman Law
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On December 9, 2022, Treasury and the IRS released proposed regulations that are intended to stop certain U.S. shareholder tax planning under section 951(a)(2)(B).

United StatesTax
Andrew Mirisis
Andrew Mirisis

IRS Issues Proposed Regulations to Curb Section 951(a)(2)(B) Tax Planning

Introduction: Consolidated Groups and Section 951(a)(2)(B) Tax Planning

On December 9, 2022, Treasury and the IRS released proposed regulations that are intended to stop certain U.S. shareholder tax planning under section 951(a)(2)(B). Proposed Regulation § 1.1502-80(j) modify the consolidated return regulations to treat members of a consolidated group as a single U.S. shareholder in certain cases for purposes of applying section 951(a)(2)(B). The preamble to the proposed regulations states that Treasury and the IRS are aware that some consolidated groups were engaging in tax planning that reduced the consolidated group's aggregate pro rata share of a lower-tier CFC's subpart F income or tested income under section 951(a)(2)(B). Additionally, in the proposed regulations, the government once again warned taxpayers that it may assert other authorities or common law doctrines such as economic

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