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Proposed F.D.I.I. Regulations: Deductions, Sales, and Services

Volume 6 No 5    |    Read Article

By Fanny Karaman and Beate Erwin

The foreign derived intangible income (“F.D.I.I.”) regime allows for a reduced rate of corporate tax rate on hypothetical intangible income used in a U.S. business to exploit foreign markets. Many implementation issues that were left open when the provision was enacted have been addressed in proposed I.R.S. proposed regulations issued early March. In their article, Fanny Karaman and Beate Erwin explain (i) which taxpayers benefit from the regime, (ii) the way deductions are taken into account, (iii) whether the deduction is always available when a U.S. corporation sells on a foreign market, (iv) the way in which foreign use of sales or services is established, and (v) the way in which related-party transactions can qualify as F.D.D.E.I. sales or services.    See more →