# Prop. Treas. Reg. § 1.954-1: Foreign base company income.

Proposed regulation, not in force. REG-105479-18, 89 FR 95362, published 2024-12-02 <https://www.federalregister.gov/documents/2024/12/02/2024-27227/previously-taxed-earnings-and-profits-and-related-basis-adjustments>. Interprets 26 U.S.C. § 954.

Par. 17. Section 1.954-1 is amended by: 1. In paragraph (c)(1)(iii)(A), adding the language “or income from a covered item” immediately after the language “that is passive”; and 2. Adding paragraphs (c)(1)(iii)(C) and (h)(4). The additions read as follows:

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(c) * * *

(1) * * *

(iii) * * *

(C) Covered items. A single item of income is the portion of a covered item (as defined in § 1.951-2(b)) that—

( 1 ) Falls within a single category of foreign base company income described in paragraph (c)(1)(iii)(A)( 1 ) or ( 2 ) of this section;

( 2 ) Falls within a separate category (as defined in § 1.904-5(a)(4)(v)); and

( 3 ) In the case of any amount which constitutes passive foreign personal holding company income, falls within a single group of passive income under the grouping rules of § 1.904-4(c)(3), (4), or (5).

* * * * *

(h) * * *

(4) Paragraph (c)(1)(iii)(C) of this section. Paragraph (c)(1)(iii)(C) of this section applies to taxable years of a foreign corporation that begin on or after [date of publication of final regulations in the Federal Register ] or are early application years (as described in § 1.959-12(d)), and to taxable years of a  United States shareholder of the foreign corporation in which or with which such taxable year of such foreign corporation ends.