FROM THE OFFICE OF PUBLIC AFFAIRS

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May 19, 2005
JS-2460

Treasury and IRS Announce Proposed
Regulations
Regarding Dual Consolidated Losses

WASHINGTON, DC -- The Treasury Department and the Internal Revenue Service today announced proposed regulations regarding dual consolidated losses under section 1503(d) of the Internal Revenue Code.  The existing regulations, as modified by the new proposed rules, are generally intended to prohibit a U.S. corporation from taking a deduction for a loss from its operations for U.S. tax purposes if that same loss may be used to offset income in a foreign country.  The new proposed regulations update the existing regulations to take into account changes in the laws and regulations of both the United States and other countries since the existing regulations were issued, as well as to reflect the U.S. experience with administering the existing regulations. 

The most significant changes provided by the proposed regulations address three concerns that arise under the current regulations.  First, the scope of the proposed regulations minimizes the over- and under-inclusive application of the current regulations.  Second, the proposed regulations modernize the regime to take into account updated U.S. entity classification regulations and related issues so that the rules can be applied with greater certainty.  Finally, the proposed regulations reduce administrative burdens imposed on taxpayers and the IRS.  

The regulations are proposed to be effective for dual consolidated losses that are incurred in taxable years beginning after the date upcoming final regulations are issued.

REPORTS

• Dual Consolidated loss Regulations