Par. 2. Section 1.245A-5 is amended by: 1. Revising the last sentence of paragraph (a); 2. Revising paragraph (d)(1)(ii); 3. Revising the second sentence of paragraph (j)(3)(ii)(D); 4. Revising paragraph (k)(1); and 5. Adding paragraphs (k)(3) and (4). The revisions and additions read as follows:
(a) * * * Paragraph (k) of this section provides the applicability date of this section, including a rule that provides that the extraordinary reduction rules described in paragraphs (e) and (f) of this section do not apply to taxable periods of foreign corporations beginning after December 31, 2025.
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(d) * * *
(1) * * *
(ii) The percentage of the upper-tier CFC's subpart F income that would be included in a United States shareholder's income under section 951(a) with respect to the upper-tier CFC's taxable year, determined without regard to the application of section 954(c)(6).
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(j) * * *
(3) * * *
(ii) * * *
(D) * * * The percentage of CFC1's subpart F income for its taxable year that would be included in a United States shareholder's income is 100%. * * *
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(k) Applicability date —(1) In general. Except as provided in paragraphs (k)(3) and (4) of this section, this section applies to taxable periods of a foreign corporation ending on or after June 14, 2019, and to taxable periods of section 245A shareholders in which or with which such taxable periods end.
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(3) Phaseout of extraordinary reduction rules. Paragraphs (b)(2)(ii), (e), and (f) of this section do not apply to taxable periods of foreign corporations beginning after December 31, 2025.
(4) Modification of extraordinary disposition rules. Paragraphs (d)(1)(ii) and (j)(3)(ii)(D) of this section apply to taxable periods of foreign corporations beginning after December 31, 2025, and to taxable periods of section 245A shareholders in which or with which such taxable periods end. For rules that apply to taxable periods of foreign corporations beginning on or before December 31, 2025, see § 1.245A-5 as contained in 26 CFR part 1 edition revised as of April 1, 2026.