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Lapse of Internal Revenue Code Section 954(c)(6)

Published on: 25 Mar 2010

Internal Revenue Code Section 954(c)(6), “Look-Thru Rule for Related Controlled Foreign Corporations” (the “look-thru rule”), lapsed on December 31, 2009, for calendar-year-end foreign subsidiaries. A company affected by the lapse of the look-thru rule will need to consider the impact the lapse has on its estimated annual effective tax rate for the first quarter of 2010. The lapse of the look-thru rule may also affect the ability of some companies to assert that certain undistributed earnings of foreign subsidiaries are subject to the indefinite reversal criteria under ASC 740-30-25-17. The latest International Tax Developments newsletter discusses in detail the implications of the lapse of the look-thru rule.

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