IRS Plans Guidance on Foreign Credit Splitter Provision Soon

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The government hopes to issue guidance before the end of the year on recently enacted legislation (P.L. 111-226) to prevent taxpayers from splitting income from underlying taxes to inappropriately obtain the foreign tax credit, a Treasury official says. Ginny Chung, an attorney-adviser in the Office of International Tax Counsel, tells practitioners IRS plans to issue guidance that would address such issues as the definition of a “splitting event” and what the government would consider “related income” to determine those events. The first tranche is likely to be a notice in December, before the foreign credit language becomes effective in January 2011, Chung says.