Welcome to this week’s edition of Tax Bytes. Our team of tax lawyers is actively monitoring for federal and international tax developments and issues of note. Each week we pull together the items we deem most important to provide updates you need to know for your business.
IRS issues inbound F-reorg relief under FIRPTA
The Treasury and IRS released Notice 2025-45 announcing plans to ease the tax hurdles foreign corporations face when relocating their corporate base to the United States. Under current rules, publicly traded foreign companies that hold US real property interests often face gain recognition under FIRPTA (Section 897(d) and (e)) when executing an inbound F reorganization, even though the transaction would otherwise qualify for nonrecognition. Notice 2025-45 proposes new exceptions that would allow certain “covered inbound F reorganizations”, where a publicly traded foreign corporation becomes a publicly traded domestic corporation, to avoid triggering these rules. The agencies explained that such restructurings, often undertaken for non-tax business reasons, do not raise tax avoidance concerns and should not be subject to the compliance burdens of existing FIRPTA rules.
In addition, the rules clarify that the “identity of stock ownership” requirement for F reorganizations under Section 368(a)(1)(F) will not be undermined by shareholder trading that occurs outside the plan of reorganization. Together, these changes are designed to reduce tax and compliance barriers, making it more practical for publicly traded multinationals to redomicile in the US without incurring unintended tax consequences. According to the notice, companies may rely on the proposed exceptions immediately for qualifying reorganizations, before formal regulations are published, with public comments due by October 20, 2025.
Entering the digital (asset) age: White House report recommends changes to the taxation of digital assets
The President’s Working Group on Digital Asset Markets recently issued a detailed report, titled “Strengthening American Leadership in Digital Financial Technology,” recommending regulatory and legislative proposals to advance the policies established in Executive Order 14178 (Jan. 23, 2025). The report identifies gaps in and recommends changes to current laws and regulations with respect to digital assets.
Read our full legal alert here.
IRS and Treasury notice proposes removal of disregarded payment loss rules and changes to dual consolidated loss rules
On August 20, 2025, the Internal Revenue Service (IRS) released Notice 2025-44 (Notice), which announced that the Department of the Treasury (Treasury) and IRS intend to issue proposed regulations that would:
- remove the final rules (2025 final regulations) with respect to section 1503(d) “disregarded payment losses” or “DPLs”,
- modify section 1503(d) “dual consolidated loss” or “DCL” deemed ordering rules, and
- extend transition relief intended to prevent application of the Global anti-Base Erosion (GloBE) Model Rules (Pillar Two) from causing a deemed “foreign use” under the DCL rules through 2027.
For a detailed discussion of section 1503(d), see our prior alert.
The contemplated proposed regulations will have applicability dates that align with the original effective date of the DPL rules, ensuring the final DPL rules will not take effect. Taxpayers may rely on the Notice until proposed regulations are published in the Federal Register.
Read our full legal alert here.
Recent Eversheds Sutherland Tax insights
Limits on Last-Minute Intervention by Partners in Partnership Tax Litigation
In this article published by Tax Notes Federal, Partner Hale Sheppard analyzes special partnership procedures, related notification duties, opportunities for partners to insert themselves in a tax dispute, and recent cases that establish limits for last-minute participation by partners in Tax Court litigation.
[View source.]
