01. International Tax

We provide tailored solutions to complex global businesses doing business in the U.S. Small or multinational, we guide clients through the maze of complex U.S. international tax rules.

02. Offshore Tax Compliance

We assist clients with specialized counsel to fix noncompliance with international tax reporting and penalties. FBAR, forms 8938, 8621, 3520, 926, 5471 and 5472 are among the most common forms that we solve through compliance programs such as streamlined procedures, Voluntary Disclosure Program or the Delinquent International Information Return Submission Procedures (DIIR).

03. Small Business Tax Planning

We assist small and medium businesses with efficient tax structuring to improve efficiencies. Proper tax election, s-corp elections and partnership planning are some of the main solutions offered.

04. Controversy Tax

We guide and represent clients before the IRS including examinations and appeals, as well as represent clients in Tax Court or Federal Courts.

05. Tax Debt Resolution

We help clients to face harsh collection activities, including liens, levies and obtaining a collection alternative such as an offer in compromise, installment payment plans, among others.

06. IRS Criminal Investigations

Our Firm provides representation before IRS Criminal Investigation Division, including Malta Pension Plans and summons.

07. High Net Worth & Family Offices

Assistance with estate planning for select clients and those with cross-border operations, planning for inheritance taxes, and gift taxes in the USA.

08. Start-Ups & Business Tax

No matter how small the idea, we assist clients with the best tax planning and alternatives for their business.

09. Crypto Tax

Our Firm provides tax planning and tax advice on crypto assets and crypto events, including mining, forks, rewards, and disposition/exchange of crypto.

10. BOI Report- Corporate Transparency Act

We assist business owners, CPA and tax preparation firms to file the Beneficial Ownership Information (BOI) report with the FinCEN.

Proposed Regulations on Previously Taxed Earnings and Profits (PTEP) – Overview

International Tax

08.20.2025

On November 29, 2024, the U.S. Department of the Treasury and the IRS issued proposed regulations addressing the taxation of previously taxed earnings and profits (PTEP). These proposed regulations provide critical guidance on PTEP accounting, related basis adjustments, and other key issues impacting U.S. shareholders of controlled foreign corporations (CFCs). This article provides an high-level review of these proposed regulations and their relevance to taxpayers and tax professionals.

 

Proposed Regulations

The proposed regulations address several complex areas under Sections 959, 961, 951, and 986 of the Internal Revenue Code, offering rules to clarify the treatment of PTEP and related adjustments:

    • PTEP Accounting:
      • Section 959: The proposed rules outline how shareholders and foreign corporations should maintain and track PTEP accounts, ensuring that these amounts are excluded from gross income to prevent double taxation.
      • Exclusions from Gross Income: Distributions of PTEP are excluded from gross income for U.S. persons under specified circumstances.
    • Basis Adjustments:
      • Section 961: The proposed regulations provide rules for adjusting the basis in shares of a foreign corporation owned by a covered shareholder and other property that indirectly holds such shares. These adjustments reflect income inclusions that give rise to PTEP or distributions of PTEP.
    • Assignment and Allocation Rules:
      • Section 951: Coordinated rules for allocating income of a foreign corporation, such as covered distributions and gains, among shareholders are introduced.
      • Foreign Currency Gain or Loss: Under Section 986(c), rules specify when foreign currency gain or loss related to PTEP is recognized and how it is calculated.
    • Additional Relevant Provisions:
      • Updates to rules under Section 960 for controlled foreign corporations (CFCs).
      • Guidance for consolidated groups, S corporations, and individuals electing under Section 962 to be taxed at corporate rates.
      • Currency translation rules and anti-avoidance provisions.

Relevance for Taxpayers and Tax Professionals

The proposed regulations provide clarity on previously ambiguous areas of PTEP taxation, facilitating compliance and minimizing the risk of double taxation. For taxpayers, particularly U.S. shareholders of CFCs, this guidance is essential for maintaining accurate PTEP accounts and applying proper basis adjustments.

Tax professionals play a critical role in helping clients navigate the complex provisions, including:

    • Evaluating Early Adoption: Taxpayers may apply the proposed regulations to earlier tax years, provided they adopt the regulations in their entirety.
    • Leveraging Transition Rules: These rules can help taxpayers ensure proper treatment of PTEP distributions and basis adjustments, particularly for domestic partnerships and S corporations.
    • Planning for Future Transactions: The guidance addresses several issues involving nonrecognition transactions, reorganizations, and acquisitions, with additional regulations expected to follow.

 The proposed regulations will be published in the Federal Register on December 2, 2024. Taxpayers and stakeholders have 90 days from the publication date to submit comments. Treasury and the IRS are specifically seeking feedback on many aspects of the proposed rules, making this a crucial opportunity for taxpayers and professionals to influence final regulations.

Taxpayers should review the proposed rules in detail to assess their impact, particularly regarding early adoption, applicability dates, and transition provisions. Engaging with tax professionals to ensure compliance and strategic tax planning is highly recommended as the rulemaking process continues.