# 2024-31373: Source of Income From Cloud Transactions

2024-31373, Source of Income From Cloud Transactions, is a Federal Register proposed rule from an unnamed agency published 2025-01-14, effective The regulations are proposed to apply to taxable years beginning on or after the date of publication of the Treasury decision adopting these regulations as final regulations in the Federal Register.; PRIA reads it as touching household money (as of 2026-06-11).

- Canonical: https://policyrisk.com/federal-register/2024-31373
- As of: 2026-06-11
- Plain-text twin of the page above; the HTML and this file carry the same facts.

## Facts
- Document number: 2024-31373
- Title: Source of Income From Cloud Transactions
- Type: Proposed Rule
- Agencies: unknown
- Citation: unknown
- Published: 2025-01-14
- Effective: The regulations are proposed to apply to taxable years beginning on or after the date of publication of the Treasury decision adopting these regulations as final regulations in the Federal Register.
- Comments close: not stated
- Significant: no
- Touches household money: yes
- Regulation identifier numbers: none
- Last updated: 2026-06-11

## Summary

The IRS is proposing new rules to decide where income from cloud transactions is considered to come from, which affects anyone making money through cloud services. These changes aim to clarify tax rules for international income and could impact how and where you report earnings. If you want to share your thoughts or ask for a public hearing, you need to do so by April 14, 2025.

## Abstract

This document contains proposed rules for determining the source of income from cloud transactions for purposes of the international provisions of the Internal Revenue Code. These proposed rules would generally affect taxpayers who earn gross income from engaging in cloud transactions.

## Effects PRIA read

- New 3‑Factor Sourcing Formula: mixed, low. The IRS proposes a formula to decide how much of your cloud income is U.S. source income by weighing three factors: intangible property (R&E, amortization, royalties), personnel (compensation of technical staff), and tangible property (depreciation and rental of servers). Under the rule, your gross…
- Taxpayer‑by‑Taxpayer Sourcing Rule: mixed, low. The proposed rules generally source cloud income using only the assets and personnel of the legal entity that recognizes the income (a taxpayer‑by‑taxpayer approach), rather than looking through to related affiliates. The IRS says it may still apply doctrines or section 482 adjustments and will con…
- Aggregation Rule for Similar Services: mixed, low. Taxpayers may aggregate substantially similar cloud transactions and source them as one transaction to reduce compliance burden, but aggregation is prohibited if the taxpayer knows or should know that aggregation would materially distort the source of gross income. The rule requires allocation of s…
- Anti‑Abuse Adjustments to Prevent Tax Avoidance: cost, low. The proposed regulations include an anti‑abuse rule that allows the IRS to adjust sourcing if a taxpayer entered transactions with the principal purpose of reducing U.S. tax liability inconsistent with the rules. The rule is intended to ensure the source of gross income reflects where the cloud tra…

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## Sources
- [2024-31373 on federalregister.gov](https://www.federalregister.gov/documents/2025/01/14/2024-31373/source-of-income-from-cloud-transactions)
- [2024-31373 as published (PDF)](https://www.govinfo.gov/content/pkg/FR-2025-01-14/pdf/2024-31373.pdf)

## Related
- [Previous: 2024-30931, C.I. Pigment Violet 29 (PV29); Regulation Under the Toxic Substances Control Ac…](https://policyrisk.com/federal-register/2024-30931)
- [Next: 2024-31385, Fees for Instantaneously Declined Transactions; Withdrawal of Proposed Rule](https://policyrisk.com/federal-register/2024-31385)
- [All Federal Register documents](https://policyrisk.com/federal-register)

Source: PRIA, https://policyrisk.com/federal-register/2024-31373 (as of 2026-06-11).