• Treasury Considering Treatment of Foreign Taxes Under Transition Tax
  • March 8, 2018
  • Under the new Tax Act, U.S. shareholders are charged a one-time tax on deferred foreign earnings of their foreign subsidiaries; these earnings and profits are measured as of November 2 if the amount is greater than on December 31. Taxpayers have brought to Treasury’s attention that the use of the November 2 date can result in an overstatement of earnings because foreign taxes generally do not accrue until year end. However, according to Gary Scanlon, from the Treasury’s Office of the International Tax Counsel, “Treasury is taking its time thinking through exceptions and ways to modify the transition tax rule.” Scanlon said the issue is likely to be addressed in future proposed regulations, but taxpayers will have to wait for a resolution.

    Read more: No Quick Answer on Transition Tax, Treasury Official Says