On December 15, 2011, the U.S. Department of the Treasury and the Internal Revenue Service released final regulations addressing the application of the foreign base company sales income rules of subpart F to controlled foreign corporations with branches or similar establishments. These regulations finalize prior temporary regulations, with three clarifying changes. Further guidance in the area is also in the works.

Overview

On December 15, 2011, the U.S. Department of the Treasury (Treasury) and the Internal Revenue Service (IRS) released final regulations addressing the application of the foreign base company sales income (FBCSI) rules of subpart F to controlled foreign corporations (CFCs) with branches or similar establishments (T.D. 9563, published in the Federal Register on December 19, 2011). These regulations finalize 2008 temporary regulations that had been set to expire before the end of 2011. The new regulations make three clarifying changes to the 2008 temporary regulations, and the preamble to the new regulations indicates that more extensive guidance is under consideration.