The U.S. Treasury and Internal Revenue Service released proposed regulations on February 27, 2008, that would significantly modify the regulations defining foreign base company sales income. The proposed regulations would affect the way that subpart F applies to a controlled foreign corporation that hires a "contract manufacturer," or that conducts selling, purchasing, or manufacturing operations outside its country of incorporation. Importantly, taxpayers may choose to apply the proposed regulations to all open tax years as if they were final regulations.

For additional alerts, visit the Global Tax Alerts archive.