Introduction
Among the many international changes wrought by the TCJA was the
addition of a separate Code Sec. 904(d) basket for income
attributable to one or more branches of a U.S. person. The final
foreign tax credit regulations issued in December 2019 (hereafter,
the "3")1 provide new and definitive guidance
on the branch basket. Attribution of income to a foreign branch is
a new, but not unprecedented problem in U.S. international tax.
Previously, many U.S. outbound taxpayers engaged in similar
exercises for purposes of the dual consolidated loss
("DCL") rules of Code Sec. 1503(d), currency translation
rules under Code Sec. 987, and Code Sec. 367 branch loss recapture,
among other purposes. The attribution of income to the foreign
branch category under Code Sec. 904 will follow a different and
equally complex approach to Code Sec. 987. In this regard, the
Final Regulations largely follow the 2018 proposed
regulations2 in their treatment of
