Proposed US Treasury regulations address several transition tax issues – but leave tax in place.

U.S. shareholders of foreign corporations must include these foreign earnings and profit (E&P) amounts in income

The IRS issued proposed regulations on Wednesday on the Transition Tax (Sec. 965), which was added to the Internal Revenue Code by the law known as the Tax Cuts and Jobs Act (REG-104226-18). Sec. 965 applies to the last tax year of a deferred foreign income corporation (DFIC) that begins before Jan. 1, 2018. The Subpart F income of the corporation (determined for the tax year under Sec. 952) is increased by the accumulated post-1986 deferred foreign income of that corporation determined as of Nov. 2, 2017 or Dec. 31, 2017, whichever is greater.

The 249-page proposed regulations that the IRS has issued will be forthcoming in their publication in the Federal Register.

What has been released is clarification and technical adjustments to the law.  The Transition Tax has not been cancelled or repealed.  All US citizens or green card holders that are owners of foreign companies (Israel-based) are subject to the tax.

US Citizen or Green Card holder shareholders in Israeli –based businesses should carefully consider the implications of the new tax on their Federal Tax obligations.