Par. 3. Section 1.250(b)-1 is amended by: 1. Revising the fourth sentence of paragraph (a); 2. Revising the first and second sentences of paragraph (d)(2)(i); and 3. Revising paragraph (d)(2)(ii). The revisions read as follows:
(a) * * * Paragraph (d) of this section provides rules for computing gross income and allocating and apportioning expenses and other deductions (referred to collectively in this section as “deductions”), for purposes of computing deduction eligible income (DEI) and foreign-derived deduction eligible income. * * *
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(d) * * *
(2) * * *
(i) * * * For purposes of determining a domestic corporation's deductions that are properly allocable to gross DEI and gross FDDEI, the corporation's deductions are allocated and apportioned to gross DEI and gross FDDEI under the section 861 regulations (as defined in § 1.861-8(a)) by treating section 250(b) as an operative section described in § 1.861-8(f). In allocating and apportioning deductions under the section 861 regulations, gross FDDEI and gross RDEI are treated as separate statutory groupings. * * *
(ii) Determination of deductions to allocate. For purposes of determining the deductions of a domestic corporation for a taxable year properly allocable to gross DEI and gross FDDEI, the deductions of the corporation for the taxable year are determined without regard to interest expense, research or experimental expenditures, and sections 170(b)(2), 172, 246(b), and 250. For purposes of this paragraph (d)(2)(ii), interest expense means any expense that is deductible under section 163 (including original issue discount) and research or experimental expenditures means any expenditure that a taxpayer deducts (including as an amortization deduction) in a taxable year under section 174, 174A, or 59(e)(2)(B).
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