In brief
In early December, Treasury and the IRS released four notices (Notice 2025-72, Notice 2025-75, Notice 2025-77, and Notice 2025-78), announcing forthcoming proposed regulations that would address international tax law changes regarding the transition from the provisions of the Tax Cuts and Jobs Act (TCJA) to those of the One Big Beautiful Bill Act (OBBBA). Written comments on Notice 2025-72 are due on January 24, while comments on Notices 2025-75 and 2025-78 are due February 2. Notice 2025-77 does not include requests for comments.
Key takeaways
- Notice 2025-72 addresses certain foreign tax accrual timing issues that arise from the short one-month 2025 taxable year created by the OBBBA’s repeal of the One-Month Deferral Election in section 898(c)(2), which is relevant for Controlled Foreign Corporations (CFCs) that previously made the deferral election.
- Notice 2025-75 provides guidance under the transition rule the OBBBA included in its changes to the section 951(a) pro rata share rule, limiting an acquiring US shareholder’s ability to reduce its pro rata share of the CFC’s subpart F or tested income for dividends the CFC makes prior to an acquisition in 2025.
- Notice 2025-77 provides guidance clarifying that only distributions of PTEP arising from inclusions by a US shareholder as Net CFC Tested Income (NCTI) in taxable years ending before June 28, 2025 are subject to section 960(d)(4), requiring taxpayers to track pre- and post-06/28/25 previously taxed earnings and profits (PTEP) groups for compliance.
- Notice 2025-78 addresses technical questions that have arisen since the OBBBA’s changes to exclude intangible property sales and sales of certain depreciable and amortizable property from qualifying as Foreign‑Derived Deduction Eligible Income (FDDEI) eligible under section 250.
Click here to access the full "United States: Four IRS Notices Address OBBBA Ambiguities".
Additional authors
- Ege Berber, PhD, Associate
- Maxwell Holleman, Associate
- Ryan Murphy, Associate
- Julia Chiao, Associate
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