The Treasury Department (“Treasury”) and the Internal Revenue Service (“IRS”) issued the highly anticipated final regulations (the “Final Regulations”) implementing the base erosion and anti-avoidance tax (the “BEAT”) on December 2, 2019.  Treasury and the IRS simultaneously issued proposed regulations (the “Proposed Regulations” and with the Final Regulations, the “Regulations”). The Regulations resolve several areas of uncertainty in the statute in a taxpayer-favorable manner.

This column focuses on certain important changes Treasury and the IRS made to the proposed BEAT regulations introduced December 13, 2018 (the “2018 Proposed Regulations”), and provides some updates to our column on the 2018 Proposed Regulations. This column also notes some key requests that Treasury and the Service did not adopt. Among other items, we will cover:

  • Clarifications to the Aggregation Rules;
  • Treasury’s refusal to exempt certain “pass-through,” middleman, or global services payments;
  • Modifications to the rules with respect to tax free transactions;
  • The interaction between the BEAT, ECI, Subpart F and GILTI; and
  • The proposed election to forgo deductions.