The Proposed PTEP Rules: Tax Basis Considerations Under Sec. 961

This article was originally published on June 11, 2025, in The Tax Adviser.

The IRS and Treasury on Nov. 29, 2024, released proposed regulations (REG-105479-18) addressing previously taxed earnings and profits (PTEP) of foreign corporations. The proposed regulations provide considerable guidance on key PTEP provisions, including the maintenance and tracking of PTEP accounts, shareholder basis adjustments, the determination of U.S. shareholders’ pro rata share of Section 951(a) inclusions, the treatment of consolidated groups and partnerships, foreign currency gain/loss rules under Section 986(c), and rules for individual U.S. shareholders of controlled foreign corporations (CFCs) who make Section 962 elections.

This article focuses on the Section 961 basis adjustment considerations included in the proposed PTEP regulations.

BDO’s Alexis Brewer, Ioana Lacatusu, Jerry Seade, and Michael Masciangelo provide details in the full article in The Tax Adviser.