DCL Separate Unit Combination and Foreign Use Rules Issues

Paul J. Crispino is an international tax counsel at General Electric Co., and John D. Bates is an associate at Ivins, Phillips & Barker. Crispino is a vice chair of the Foreign Activities of U.S. Taxpayers (FAUST) Committee of the American Bar Association Section of Taxation, and Bates is a member of the FAUST Committee. The views expressed herein do not necessarily represent those of the authors’ employers or the ABA. The authors wish to thank Joseph M. Calianno, a partner and international technical tax practice leader in Grant Thornton LLP’s Washington National Tax office and a vice chair of the FAUST Committee, for his insightful comments on this report. Any errors are the authors’ alone. None of the discussion or analysis in this report is intended to be tax or legal advice.

This report addresses technical concerns raised by the combined separate unit rule and foreign use rule, each set forth in the 2007 final dual consolidated loss regulations. It focuses on the interaction of those rules with other provisions in the regulations and provides targeted recommendations regarding areas in which policymakers could reduce uncertainty or improve the rules’ operation.