IRS Issues Proposed Regulations on Base Erosion and Avoidance Tax

• Whether a taxpayer is an “applicable taxpayer” on which BEAT may be imposed
• Determining the amount of “base erosion payments” and “base erosion tax benefits” arising from base erosion payments
• Determining “modified taxable income”
• Computing the “base erosion minimum tax amount”
• Applying the proposed regulations to partnerships
• Applying certain rules in the proposed regulations to banks, registered securities dealers and insurance companies
• Anti-abuse rules
• Application of the BEAT to consolidated groups
• The interaction of the BEAT with limitations on the use of a loss corporation’s items under sections 382 and 383
• Certain reporting and record-keeping requirements

The regulations are generally proposed to apply to taxable years beginning after December 31, 2017, although if any provision is not finalized until after June 22, 2019, IRS and Treasury expect such provision to apply to taxable years ending on after mid-February 2019.

Sidley expects to publish a comprehensive analysis once we have completed a more in-depth review of proposed regulations.