IRS proposes foreign tax credit regs.

• Position: FOREIGNTAXABUSE

The IRS has released proposed regulations that would disallow foreign tax credits for foreign taxes purportedly paid in connection with certain artificially engineered, highly structured transactions.

Foreign tax credits are designed to relieve U.S. taxpayers from double taxation of their foreign source income. Transactions addressed by the regulations, in contrast, are structured so that a U.S. taxpayer voluntarily subjects itself to foreign tax where an ordinary business...