Forthcoming regs will identify two new foreign tax credit “splitter arrangements.”

In a Notice, IRS has announced that it intends to issue regs under Code Sec. 909 to address the separation of related income from foreign income taxes paid by a “section 902 corporation” pursuant to a foreign-initiated adjustment. The regs will identify two new “splitter arrangements,” one of which involves a change to ownership structure made in anticipation of the foreign-initiated adjustment, and the other of which involves making an extraordinary distribution before paying the adjustment so as to generate substantial amounts of foreign taxes deemed paid without a corresponding U.S. income inclusion. Notice 2016-52, 2016-40 IRB