What’s New

New section 960(d)(4). Section 960(d)(4) was added to the Internal Revenue Code (“Code”) by section 70312(b) of Public Law 119-21, 139 Stat. 72 (July 4, 2025), commonly known as the One, Big, Beautiful Bill Act (“OBBBA”). New section 960(d)(4) disallows a foreign tax credit under section 901 for 10% of any foreign income taxes paid or accrued (or deemed paid under section 960(b)(1)) with respect to section 959(a) distributions, to the extent the previously taxed earnings and profits were excluded under section 959(a) by reason of a section 951A inclusion in a U.S. shareholder’s tax year ending after June 28, 2025.

Form changes. There is a change in the manner in which special cases of the sourcing of income are reported on Schedule A. See the specific instructions for Schedule A, column 1(b).

There is a change in the manner in which Schedule B, Part I is completed. Column 2(b) has been split into two columns. Add to new column 2(b)(2) the previously taxed earnings and profits (PTEP) code attributable to distributions of PTEP. See the specific instructions for Schedule B, Part I, column 2(b).

There is a change in the manner in which taxes attributable to section 951A PTEP distributions are reported on Schedule E, Part I. See the specific instructions for Schedule E, Part I, columns 12 through 16.

On Schedule G, new line H provides a reduction for disallowed taxes under section 960(d)(4). See the specific instructions for Schedule G, line H.