Treasury Previews Guidance on Foreign Currency, QSB Stock, Meals Deduction, CFC Attribution

IRS and Treasury officials recently offered insight into key guidance projects on a broad range of issues, including qualified small business stock, downward attribution, foreign currency gains, and deductions for meals and executive compensation.

Speaking at a conference for the tax section of the American Bar Association the week of May 4, officials previewed imminent guidance projects covering both One Big Beautiful Bill Act (OBBBA) implementation and other priorities, including:

• Qualified Small Business Stock: Treasury attorney-adviser Evan Adams said the scope of regulations under Section 1202 is still “in flux” but is likely to address issues broader than just the changes from the OBBBA. Adams said Treasury is aware of a drafting error affecting the indexing of capital gains for inflation and is interested in addressing taxpayers “stacking the limit” using multiple trusts. See our guide, Qualified Small Business Stock: Planning for Founders and Early Investors, for more information on qualified small business stock planning in the wake of the OBBBA changes.
• Downward Attribution: The IRS is planning to provide a notice over the summer on the new downward attribution rules under Section 951B, according to Treasury Department International Tax Counsel Jim Wang. The OBBBA reinstated Section 958(b)(4) and replaced it with new controlled foreign corporation (CFC) inclusion rules under new Section 951B.
• Foreign Currency Gain or Loss: Wang said the IRS is also hoping to release a notice on the CFC election under Section 987 soon. “We are working very hard to get that out this summer because we understand that the key is to have people be able to comply with the election for the CFCs for their 2025 returns,” Wang said. The IRS announced proposed rules in February to modify the December 2024 final regulations. Wang noted that additional guidance on the rules will take longer. See our prior write-up, IRS Proposes Modifications to Section 987 Final Regulations, for more information. 
• Corporate Alternative Minimum Tax: The IRS does not plan to issue a second set of proposed regulations on the corporate alternative minimum tax until 2027, according to Heather Harman of the Treasury Office of Tax Legislative Counsel. The IRS issued interim guidance throughout 2025 and then in February of 2026. See our prior alert, Latest Interim CAMT Guidance Expands Adjustments to Financial Statement Income, for more information. 
• Section 162(m): Guidance on the $1 million limit on deducting employee pay at public companies is expected to be released in the fall, according to Kurt Lawson, Treasury deputy benefits tax counsel. The OBBBA expanded the aggregation rules for identifying covered employees and calculating compensation.
• Sovereign Wealth Funds: The IRS plans to release guidance “in the very near future” clarifying the effective date of the recently proposed rules on the income of foreign governments under Section 892, according to Teisha Ruggiero, an attorney-adviser in Treasury’s Office of International Tax Counsel.
• Meals Deduction: Treasury Associate Benefits Tax Counsel Christa Bierma said the IRS is “working hard” on guidance for Section 274(o), which now disallows deductions for some meals provided at the convenience of the employer or at specified employer facilities under a delayed change from the Tax Cuts and Jobs Act that took effect for expenses paid or incurred after 2026. The OBBBA added two exceptions to the disallowance.
• Paid Family and Medical Leave: Treasury intends to issue a notice “very soon” with proposed rules on the credit for paid family and medical leave under Section 45S, which was expanded under the OBBBA, according to Helen Morrison, benefits tax counsel at Treasury.
• Employer-Provided Childcare Credit: Morrison said Treasury is working on the tax credit under Section 45F, which was also expanded under the OBBBA. 
• Trump Accounts: Kevin Knopf, a senior technician reviewer in the IRS Office of Chief Counsel, said the government is working on nondiscrimination rules for employers participating in Trump accounts under Section 128. That section references the nondiscrimination rules for the income exclusion rule for dependent care assistance programs under Section 129.
• Employer Payments of Student Loans: Treasury will offer initial guidance in a notice for employers making matching contributions toward a worker’s qualified student loan payments, according to Bill Evans, an attorney with Treasury’s Office of Tax Policy.