5/11/2021
Revenue Procedure 2021-26: Method of Accounting for CFCs provides guidance for accounting method changes made on behalf of certain foreign corporations.
The procedure:
expands, for a limited period, the availability of automatic consent for controlled foreign corporations (CFCs) to change their methods of accounting for depreciation to the alternative depreciation system in order to ease the burden on CFCs of conforming their income and earnings and profits computations with their qualified business asset investment computations
prescribes terms and conditions for accounting method changes made on behalf of CFCs to ensure that adjustments resulting from CFCs’ method changes are properly included in computations of tested income and tested loss
clarifies certain aspects of the “150 percent rule” that limits audit protection for CFCs and 10/50 corporations.
The Treasury Department and the IRS previously announced their intention to issue this guidance in the Treasury decision containing the final section 951A regulations published on June 21, 2019.
Revenue Procedure 2021-26 is in Internal Revenue Bulletin 2021-22, June 1, 2021.