In under four weeks, Treasury and the IRS released four separate sets of proposed regulations implementing international tax changes made by the One Big Beautiful Bill Act (OBBBA). The packages address controlled foreign corporation income allocation, deduction-eligible income, foreign currency rules, and foreign tax credits.
CFC pro rata share and tax year closing rules
The first package, released on 26 August 2026, addresses CFC pro rata share and tax year closing under sections 951 and 951A. It allocates subpart F income and tested income or loss based on each shareholder's ownership period, using daily proration.
DEI property disposition rules
On 20 August 2026, Treasury and the IRS proposed regulations under section 250 addressing the OBBBA's new exclusion from deduction-eligible income for dispositions of intangible and depreciable property. The rules define how those dispositions are carved out of the section 250 deduction base.
CFC section 987 exemption election
The third package, dated 14 August 2026, permits CFCs to elect out of section 987 foreign currency gain or loss recognition on ordinary remittances. This is a significant practical relief for multinational groups with CFC branch structures that would otherwise trigger recognition on routine cash movements.
CFC tax-year transition and PTEP foreign tax credit rules
The earliest package, released on 3 August 2026, implements two distinct changes. First, it gives effect to the OBBBA repeal of the one-month CFC deferral election under section 898(c). Second, it introduces a 10% foreign tax credit disallowance on section 951A previously taxed earnings and profits distributions under new section 960(d)(4).
Practitioners should note that all four packages are proposed regulations and remain open to comment before finalisation. Groups with CFC structures, foreign branches, or significant intangible property dispositions should review each package promptly given the breadth of the changes.