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Abstract: 

The revenue raisers in the Education Jobs and Medicaid Assistance Act of 2010, which was signed into law on August 10, 2010, by President Obama, impose significant restrictions on the use of the foreign tax credit by U.S. multinational companies. Specifically, the Act contains provisions dealing with foreign tax credit splitting transactions, elimination of a portion of the foreign tax credit in a “covered asset acquisition,” elimination of the benefits provided by the “hop-scotch” rule of Section 956, and changes to the 80/20 rules, among other less significant changes. This article provides an overview of the changes made by the revenue raisers, including practical considerations for taxpayers that might be affected by these new provisions.

Keywords: Covered asset acquisition, IRC Section 909, 80/20 rules, foreign tax credit splitting event, IRC Section 956 hopscotch, IRS Section 304, foreign acquiring corporation

Affiliations:  1: Thompson Hine LLP; 2: Thompson Hine LLP.