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The Treasury Department (“Treasury”) and the Internal Revenue Service (“IRS”) issued the highly anticipated final regulations (the “Final Regulations”) implementing the base erosion and anti-avoidance tax (the “BEAT”) on December 2, 2019.  Treasury and the IRS simultaneously issued proposed regulations (the “Proposed Regulations” and with the Final Regulations, the “Regulations”). The Regulations resolve several areas of uncertainty in the statute in a taxpayer-favorable manner.

This column focuses on certain important changes Treasury and the IRS made to the proposed BEAT regulations introduced December 13, 2018 (the “2018 Proposed Regulations”), and provides some updates to our column on the 2018 Proposed Regulations. This column also notes some key requests that Treasury and the Service did not adopt. Among other items, we will cover:

  • Clarifications to the Aggregation Rules;
  • Treasury’s refusal to exempt certain “pass-through,” middleman, or global services payments;
  • Modifications to the rules with respect to tax free transactions;
  • The interaction between the BEAT, ECI, Subpart F and GILTI; and
  • The proposed election to forgo deductions.

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Author

Mr. Lipeles practices in the area of corporate tax law, with an emphasis on international tax planning. He joined the firm in 1996 and became a partner in 1999. From 1993 to 1996, Mr. Lipeles was an associate at the law firm of Jenner & Block. From 1994 to 1996, he was also an Adjunct Professor at IIT/Chicago Kent College of Law, where he taught classes on International Taxation and other subjects. Mr. Lipeles served as a law clerk to the Honorable E. Grady Jolly of the U.S. Court of Appeals, Fifth Circuit in 1992 and 1993.

Author

Julia Skubis Weber is a partner in Baker McKenzie’s Global Tax Practice Group in Chicago. She has been advising US, non-US and multinational corporate and pass-through clients on federal income tax planning matters since 2005.

Author

Joshua D. Odintz is a partner in and on the management committee of Baker McKenzie’s North American Tax Practice Group. Joshua held high-level government positions with both the US Department of the Treasury and the Senate Finance Committee. He previously served as a Senior Advisor for Tax Reform to the Assistant Secretary at the US Department of the Treasury, where he advised Senior Treasury officials on tax reform options and issues. Joshua also served as the Chief Tax Counsel to the President’s National Commission on Fiscal Responsibility and Reform, and was instrumental in formulating the tax proposals that were contained in the Commission’s report, entitled the Moment of Truth. Additionally, Joshua served as the Acting Tax Legislative Counsel at the Treasury. Joshua is a frequent speaker at IFA, TEI, ABA Tax Section, NY State Bar Tax Section, Practicing Law Institute and Federal Bar Association tax meetings and conferences.

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Alexandra Minkovich is a partner in Baker McKenzie's North American Tax Practice. She has over a decade of experience handling a variety of tax, tax controversy and legislative issues. She also brings significant experience representing clients with respect to domestic tax issues, including advising financial institutions, and is well versed in administrative law. Immediately prior to joining the Firm, Ms. Minkovich served as Associate Tax Legislative Counsel with the U.S. Department of Treasury, Office of Tax Policy. In that role, Ms. Minkovich advised the Assistant Secretary (Tax Policy) and General Counsel regarding tax policy considerations in regulations and Internal Revenue Bulletin guidance, provided advice on tax legislative proposals, and provided litigation advice regarding the validity of Treasury and IRS guidance. She also provided technical comments on tax legislation to the Senate Committee on Finance and the House Ways & Means Committee, as well as to individual members’ offices.

Author

Katie Rimpfel is an associate in Baker McKenzie’s North America Tax Practice Group in Washington, DC. Katie practices in the areas of tax planning, tax controversy and transfer pricing. She advises major multinational corporations and individuals on US federal income taxation matters.