§91 Certain Foreign Branch Losses Transferred to Specified 10-percent Owned Foreign Corporations

Summary

A U.S. corporation that moves almost all assets of a foreign branch to a foreign company it owns at least 10% of must add a certain amount to its income for the year of the move. That amount, called the transferred loss amount, is the excess (if any) of losses the foreign branch had and the U.S. company was allowed to deduct after December 31, 2017 and before the transfer, over the branch’s income for tax purposes from after those loss years up to the transfer and any amount counted under section 904(f)(3) because of the transfer. Any gain the taxpayer reports on the transfer reduces the transferred loss amount, but not below zero. The added income is treated as U.S.-source. The taxpayer and the foreign recipient must adjust the tax value of the stock and the transferred property, following Treasury rules.