A Dual-Edged Sword: Exploring the Proposed DCL Regulations

On August 6, 2024, Treasury and the IRS released the long-awaited proposed dual consolidated loss (DCL) regulations, which cover a wide variety of issues, some of which were expected and others came as a surprise to taxpayers. Among the expected topics covered in the proposed regulations are the interaction of the DCL rules with the Pillar Two GloBE calculation and the effect of intercompany transactions and items arising from stock ownership in computing a DCL. In the “surprise” column are the disregarded payment loss (DPL) rules, an anti-hybrid regime that targets deduction/no inclusion outcomes described in BEPS 1.0. Do the proposed regulations extend the relief provided in Notice 2023-80? Will the inclusion of a DCL in the GloBE calculation result in a “foreign use”? What is the practical impact of the new DPL regime, what authority does Treasury have to issue these rules, and how should taxpayers prepare for their implementation? How are intercompany transactions affected by the proposed regulations? 

Join us as our co-hosts Kristen Gamboa and Gary Scanlon are joined by returning guest, Doug Holland from KPMG’s WNT International Tax group, to answer these questions and more on the latest episode of Inside International Tax.