First IRS guidance after tax reform focuses on repatriation

Written on Jan 04, 2018

The IRS on Dec. 29 issued its first post-tax reform guidance, this relating to repatriation provisions.

Notice 2018-07 provides guidance on issues including the potential double-counting of earnings and profits, the definition of cash and the treatment of distributions.

Companies have been looking for the guidance because under the new law, the repatriation is deemed to have taken place by Jan. 1, 2018. It’s a tradeoff for a 100% tax exemption on most foreign dividends. Companies will owe a 15.5% tax on cash and an 8% tax on illiquid assets.

The guidance addresses such issues as the potential double-counting of earnings and profits, the definition of cash and the treatment of distributions.

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