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On 13 December 2018, the Treasury Department and the Internal Revenue Service (the Service) issued proposed regulations (the Proposed Regulations) providing guidance on the base erosion and anti-avoidance tax (the BEAT) under section 59A. Congress enacted section 59A as part of the Tax Cuts and Jobs Act (the TCJA), requiring certain corporations to pay a minimum tax associated with deductible and certain other payments to foreign related parties.

This client alert provides a high level overview of the BEAT and the Proposed Regulations. This alert also provides a more detailed discussion of select issues which taxpayers have been concerned about since Congress enacted section 59A, including how the BEAT might apply in non-recognition transactions, netting rules, how the services cost method (SCM) exception to the BEAT applies, the potential for double or triple taxation under the BEAT, how the BEAT applies to partnerships, and potential ways to "beat" the BEAT.

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