Insights & News

IRS Issues Proposed Regs on Bad Debt Deductions

January 04, 2024

IRS Proposes Rules on Bad Debt Deductions of Financial Companies
The Internal Revenue Service (IRS) has released proposed rules on bad debt deductions for regulated financial companies and members of regulated financial groups. The December 28 proposed rules would update the standard for determining when a debt instrument held by a regulated financial company or a member of a regulated financial group — such as some banks and insurance companies — will conclusively be deemed worthless. The proposed regulations do not include regulated investment companies and real estate investment trusts.


IRS Issues Notice on Basis Adjustments to Previously Taxed Income
The IRS published a notice on December 28 regarding basis adjustments that can result when a transaction moves a foreign affiliate higher in a company’s structure. The notice addresses basis adjustments where a lower-tier controlled foreign corporation (CFC) becomes an upper-tier CFC after an inbound transaction under Sections 961(a) and 961(c). In this scenario, a CFC transfers assets of another CFC, in the form of stock, to a domestic company. The IRS said the domestic corporation would normally get the basis of the stock by referencing the cost when it was in the hands of the transferor CFC.


IRS Releases Proposed Guidance for Domestic Content Phaseouts Exceptions
The U.S. Department of the Treasury and the IRS issued a notice on December 28 regarding forthcoming proposed regulations on exceptions to tax credit phaseouts for entities that don’t meet domestic content requirements. The guidance prescribes procedures for applicable entities to claim the exceptions to phaseouts for elective payment projects that fail to satisfy the domestic content requirements and begin construction during 2024. The rules relate to certain tax credits established through the Inflation Reduction Act of 2022.

Information contained in this publication should not be construed as legal advice or opinion or as a substitute for the advice of counsel. The articles by these authors may have first appeared in other publications. The content provided is for educational and informational purposes for the use of clients and others who may be interested in the subject matter. We recommend that readers seek specific advice from counsel about particular matters of interest.

Copyright © 2024 Stradley Ronon Stevens & Young, LLP. All rights reserved.

Related Services

Related Resources

back to top