{"id":2080,"date":"2023-01-05T13:05:16","date_gmt":"2023-01-05T13:05:16","guid":{"rendered":"https:\/\/gtmtax.com\/insight\/new-proposed-ftc-regulations-relaxing-the-cost-recovery-and-attribution-requirements\/"},"modified":"2025-07-23T20:03:13","modified_gmt":"2025-07-23T20:03:13","slug":"new-proposed-ftc-regulations-relaxing-the-cost-recovery-and-attribution-requirements","status":"publish","type":"insight","link":"https:\/\/gtmtax.com\/insight\/new-proposed-ftc-regulations-relaxing-the-cost-recovery-and-attribution-requirements\/","title":{"rendered":"New Proposed FTC Regulations: Relaxing the Cost Recovery and Attribution Requirements"},"content":{"rendered":"<div id=\"sh-block--458850691\" class=\"sh-block-wrapper text-block \">\n\n\n\n<!-- text-block\/render.twig-->\n<div class=\"container\">\n    <div class=\"wysiwyg layout-1col\">\n        <p class=\"MsoNormal\">As discussed in a <a href=\"https:\/\/gtmtax.com\/tax-insights\/articles\/ftc-final-regs-and-non-creditable-foreign-taxes-q1-provision-and-next-steps\/\">previous blog post<\/a>, final foreign tax credit (FTC) regulations (the \u201c2022 FTC final regulations \u201c)<a title=\"\" href=\"file:\/\/\/C:\/Users\/Megan.Kelly\/AppData\/Local\/Microsoft\/Windows\/INetCache\/Content.Outlook\/6GQS29WF\/FTC%20Prop%20regs%20blog_v2.docx#_ftn1\" name=\"_ftnref1\"><span class=\"MsoFootnoteReference\"><!-- [if !supportFootnotes]--><span class=\"MsoFootnoteReference\"><span style=\"font-size: 11.0pt; font-family: 'Calibri',sans-serif; mso-fareast-font-family: Calibri; mso-fareast-theme-font: minor-latin; mso-ansi-language: EN-US; mso-fareast-language: EN-US; mso-bidi-language: AR-SA;\">[1]<\/span><\/span><!--[endif]--><\/span><\/a> effective beginning with the 2022 tax year would cause many previously creditable foreign income taxes to become non-creditable for US purposes.<\/p>\n<p class=\"MsoNormal\">In response to taxpayer comments, Treasury issued a set of technical corrections to the 2022 FTC final regulations in July 2022<a title=\"\" href=\"file:\/\/\/C:\/Users\/Megan.Kelly\/AppData\/Local\/Microsoft\/Windows\/INetCache\/Content.Outlook\/6GQS29WF\/FTC%20Prop%20regs%20blog_v2.docx#_ftn2\" name=\"_ftnref2\"><span class=\"MsoFootnoteReference\"><!-- [if !supportFootnotes]--><span class=\"MsoFootnoteReference\"><span style=\"font-size: 11.0pt; font-family: 'Calibri',sans-serif; mso-fareast-font-family: 'Times New Roman'; mso-ansi-language: EN-US; mso-fareast-language: EN-US; mso-bidi-language: AR-SA;\">[2]<\/span><\/span><!--[endif]--><\/span><\/a> and an additional set of new proposed FTC regulations in November 2022<a title=\"\" href=\"file:\/\/\/C:\/Users\/Megan.Kelly\/AppData\/Local\/Microsoft\/Windows\/INetCache\/Content.Outlook\/6GQS29WF\/FTC%20Prop%20regs%20blog_v2.docx#_ftn3\" name=\"_ftnref3\"><span class=\"MsoFootnoteReference\"><!-- [if !supportFootnotes]--><span class=\"MsoFootnoteReference\"><span style=\"font-size: 11.0pt; font-family: 'Calibri',sans-serif; mso-fareast-font-family: 'Times New Roman'; mso-ansi-language: EN-US; mso-fareast-language: EN-US; mso-bidi-language: AR-SA;\">[3]<\/span><\/span><!--[endif]--><\/span><\/a> (the \u201c2022 FTC proposed regulations\u201d). The 2022 FTC proposed regulations contain two primary modifications:<\/p>\n<ul class=\"checklist\">\n<li class=\"MsoNormal\"><!-- [if !supportLists]-->Relax the cost recovery requirement by only requiring recovery of \u201csubstantially all\u201d of each item of significant cost or expense and adding percentage-based safe harbor exceptions for foreign law cost disallowances; and<\/li>\n<li class=\"MsoNormal\">Add a single-country license exception to the attribution rule for the sourcing of royalty payments.<\/li>\n<\/ul>\n<p class=\"MsoNormal\">The following taxes, which were generally non-creditable under the 2022 FTC final regulations, are expected to continue to be non-creditable under the 2022 FTC proposed regulations:<\/p>\n<ul class=\"checklist\">\n<li class=\"MsoNormal\"><!-- [if !supportLists]-->Income taxes imposed by jurisdictions which do not follow Sec. 482 of the Internal Revenue Code (the \u201cCode\u201d) or OECD arm\u2019s-length transfer pricing principles (e.g., Brazil)<\/li>\n<li class=\"MsoNormal\">Some foreign taxes offset by refundable credits (i.e., R&amp;D credits)<\/li>\n<li class=\"MsoNormal\">Taxes based on location of customers or other destination-based criterion (i.e., \u201cdigital\u201d taxes)<\/li>\n<\/ul>\n<p class=\"MsoNormal\">In general, the proposed regulations are proposed to apply to taxable years ending on or after the date of filing of the final regulations in the Federal Register. Until the effective date of final regulations, and subject to certain conditions, a taxpayer also may rely on the provisions addressing the cost recovery requirement and\/or the attribution requirement for royalty payments for foreign taxes paid in taxable years beginning on or after December 28, 2021, and ending before the effective date of final regulations.<\/p>\n<p class=\"MsoNormal\">As a reminder, taxes which are not <i>creditable<\/i> foreign income taxes may still be <i>deductible<\/i> for E&amp;P\/taxable income purposes.<\/p>\n<p class=\"MsoNormal\">In this blog, we discuss the changes to the cost recovery and attribution requirements, with some considerations for reevaluating creditable foreign income taxes ahead of year-end tax provision calculations for 2022.<\/p>\n<h2 class=\"MsoNormal\"><b>Cost Recovery Requirement<\/b><\/h2>\n<p class=\"MsoNormal\">The 2022 FTC proposed regulations retain the general cost recovery requirement under the 2022 FTC final regulations, but provides that the relevant foreign tax law need only permit recovery of \u201csubstantially all\u201d of each item of significant cost or expense, determined based solely on the terms of the foreign tax law.<a title=\"\" href=\"file:\/\/\/C:\/Users\/Megan.Kelly\/AppData\/Local\/Microsoft\/Windows\/INetCache\/Content.Outlook\/6GQS29WF\/FTC%20Prop%20regs%20blog_v2.docx#_ftn4\" name=\"_ftnref4\"><span class=\"MsoFootnoteReference\"><!-- [if !supportFootnotes]--><span class=\"MsoFootnoteReference\"><span style=\"font-size: 11.0pt; font-family: 'Calibri',sans-serif; mso-fareast-font-family: Calibri; mso-fareast-theme-font: minor-latin; mso-ansi-language: EN-US; mso-fareast-language: EN-US; mso-bidi-language: AR-SA;\">[4]<\/span><\/span><!--[endif]--><\/span><\/a> The 2022 FTC proposed regulations also continue to list capital expenditures, interest, rents, royalties, wages or other payments for services, and research and experimentation as \u201cper se\u201d significant costs and expenses.<a title=\"\" href=\"file:\/\/\/C:\/Users\/Megan.Kelly\/AppData\/Local\/Microsoft\/Windows\/INetCache\/Content.Outlook\/6GQS29WF\/FTC%20Prop%20regs%20blog_v2.docx#_ftn5\" name=\"_ftnref5\"><span class=\"MsoFootnoteReference\"><!-- [if !supportFootnotes]--><span class=\"MsoFootnoteReference\"><span style=\"font-size: 11.0pt; font-family: 'Calibri',sans-serif; mso-fareast-font-family: Calibri; mso-fareast-theme-font: minor-latin; mso-ansi-language: EN-US; mso-fareast-language: EN-US; mso-bidi-language: AR-SA;\">[5]<\/span><\/span><!--[endif]--><\/span><\/a><\/p>\n<p class=\"MsoNormal\">Under a new safe harbor provision,<a title=\"\" href=\"file:\/\/\/C:\/Users\/Megan.Kelly\/AppData\/Local\/Microsoft\/Windows\/INetCache\/Content.Outlook\/6GQS29WF\/FTC%20Prop%20regs%20blog_v2.docx#_ftn6\" name=\"_ftnref6\"><span class=\"MsoFootnoteReference\"><!-- [if !supportFootnotes]--><span class=\"MsoFootnoteReference\"><span style=\"font-size: 11.0pt; font-family: 'Calibri',sans-serif; mso-fareast-font-family: Calibri; mso-fareast-theme-font: minor-latin; mso-ansi-language: EN-US; mso-fareast-language: EN-US; mso-bidi-language: AR-SA;\">[6]<\/span><\/span><!--[endif]--><\/span><\/a> the foreign tax law does not fail the \u201csubstantially all\u201d standard if:<\/p>\n<ul class=\"checklist\">\n<li class=\"MsoNormal\"><!-- [if !supportLists]-->The total portion of the item (or items) that is disallowed does not exceed 25%<\/li>\n<li class=\"MsoNormal\">The limitation caps the recovery of an item of significant cost or expense (or multiple items of cost or expense that relate to a single category of significant costs and expenses) to not less than 15% of gross receipts, gross income, or a similar measure<\/li>\n<li class=\"MsoNormal\">The limitation caps the recovery at not less than 30% of taxable income (determined without regard to the item at issue) or a similar measure<\/li>\n<\/ul>\n<p class=\"MsoNormal\">A foreign law limitation that caps deductions of multiple items that relate to different categories of per se significant costs and expenses at a stated percentage (e.g., a cap on the deduction of all interest and royalties, combined, at 15% of gross receipts), or that caps deductions of multiple items of significant costs or expense at a stated percentage, would not meet the safe harbor.<\/p>\n<p class=\"MsoNormal\">Taxpayers will not need to identify a corresponding principle underlying the disallowances required under the Code for a foreign tax law disallowance which qualifies for the safe harbor. If the safe harbor does not apply, then the limitation would be examined under the principles-based exception from the 2022 FTC final regulations, which permits more substantial disallowances (including complete disallowances) of an item of significant cost or expense that are consistent with any principle underlying the disallowances required under the Code. The 2022 FTC proposed regulations make additional clarifications to this rule, to provide that the principle must be reflected in a disallowance within the income tax provisions of the Code, and if the disallowance addresses a non-tax public policy concern, then such concern must be similar to the non-tax public policy concerns reflected in the Code.<a title=\"\" href=\"file:\/\/\/C:\/Users\/Megan.Kelly\/AppData\/Local\/Microsoft\/Windows\/INetCache\/Content.Outlook\/6GQS29WF\/FTC%20Prop%20regs%20blog_v2.docx#_ftn7\" name=\"_ftnref7\"><span class=\"MsoFootnoteReference\"><!-- [if !supportFootnotes]--><span class=\"MsoFootnoteReference\"><span style=\"font-size: 11.0pt; font-family: 'Calibri',sans-serif; mso-fareast-font-family: Calibri; mso-fareast-theme-font: minor-latin; mso-ansi-language: EN-US; mso-fareast-language: EN-US; mso-bidi-language: AR-SA;\">[7]<\/span><\/span><!--[endif]--><\/span><\/a><\/p>\n<p class=\"MsoNormal\">Foreign taxes such as the German trade tax, which disallows 25% of all financing costs over \u20ac200,000, may qualify for the safe harbor and be considered creditable without relying on the more subjective principles-based exception. On the other hand, foreign tax laws that completely disallow deductions for an item of per se significant costs and expenses and do not meet the principles-based exception may continue to be non-creditable.<\/p>\n<h2 class=\"MsoNormal\"><b>Attribution Requirement<\/b><\/h2>\n<p class=\"MsoNormal\">The 2022 FTC final regulations required that, in order for a foreign withholding tax on royalties to meet the attribution requirement, the foreign law would have to source the royalties based on the place of use of, or the right to use, the intangible property.<a title=\"\" href=\"file:\/\/\/C:\/Users\/Megan.Kelly\/AppData\/Local\/Microsoft\/Windows\/INetCache\/Content.Outlook\/6GQS29WF\/FTC%20Prop%20regs%20blog_v2.docx#_ftn8\" name=\"_ftnref8\"><sup><!-- [if !supportFootnotes]--><\/sup><sup><span style=\"font-size: 11.0pt; font-family: 'Calibri',sans-serif; mso-fareast-font-family: Calibri; mso-fareast-theme-font: minor-latin; mso-ansi-language: EN-US; mso-fareast-language: EN-US; mso-bidi-language: AR-SA;\">[8]<\/span><\/sup><!--[endif]--><\/a><sup> \u00a0<\/sup>Because many non-U.S. jurisdictions source royalties based on the residence of the payer, many royalty withholding taxes would become non-creditable, especially where the foreign jurisdiction does not have an income tax treaty with the U.S.<\/p>\n<p class=\"MsoNormal\">The 2022 FTC proposed regulations provide a new limited \u201csingle-country\u201d exception from the general sourcing rule.<a title=\"\" href=\"file:\/\/\/C:\/Users\/Megan.Kelly\/AppData\/Local\/Microsoft\/Windows\/INetCache\/Content.Outlook\/6GQS29WF\/FTC%20Prop%20regs%20blog_v2.docx#_ftn9\" name=\"_ftnref9\"><sup><!-- [if !supportFootnotes]--><\/sup><sup><span style=\"font-size: 11.0pt; font-family: 'Calibri',sans-serif; mso-fareast-font-family: Calibri; mso-fareast-theme-font: minor-latin; mso-ansi-language: EN-US; mso-fareast-language: EN-US; mso-bidi-language: AR-SA;\">[9]<\/span><\/sup><!--[endif]--><\/a><sup> \u00a0<\/sup>In general, the single-country exception applies where:<\/p>\n<ul class=\"checklist\">\n<li class=\"MsoNormal\"><!-- [if !supportLists]-->The income subject to the tested foreign tax is characterized as gross royalty income; and<\/li>\n<li class=\"MsoNormal\">The payment giving rise to such income is made pursuant to a single-country license.<\/li>\n<\/ul>\n<p class=\"MsoNormal\">Foreign tax law generally applies for purposes of determining whether the gross income or gross receipts arising from a transaction are characterized as a royalty, except in the case of a transaction that is considered the sale of a copyrighted article treated as a sale of tangible property under the rules of Reg. \u00a71.861-18. A payment is made pursuant to a single-country license if the terms of the written license agreement under which the payment is made characterize the payment as a royalty and limit the territory of the license to the foreign country imposing the tested foreign tax.<a title=\"\" href=\"file:\/\/\/C:\/Users\/Megan.Kelly\/AppData\/Local\/Microsoft\/Windows\/INetCache\/Content.Outlook\/6GQS29WF\/FTC%20Prop%20regs%20blog_v2.docx#_ftn10\" name=\"_ftnref10\"><sup><!-- [if !supportFootnotes]--><\/sup><sup><span style=\"font-size: 11.0pt; font-family: 'Calibri',sans-serif; mso-fareast-font-family: Calibri; mso-fareast-theme-font: minor-latin; mso-ansi-language: EN-US; mso-fareast-language: EN-US; mso-bidi-language: AR-SA;\">[10]<\/span><\/sup><!--[endif]--><\/a><sup> \u00a0<\/sup>However, a payment (or portion of a payment) may be treated as made pursuant to a single-country license even if the written agreement does not limit the territory of the license to the foreign country imposing the tax or provides for payments in addition to those for the use of intangible property (for example, for related services), if the agreement separately states the portion (whether as a specified amount or as a formula) of the payment subject to the tested foreign tax that is characterized as a royalty and that is with respect to the part of the territory of the license that is solely within the foreign country imposing the tax.<a title=\"\" href=\"file:\/\/\/C:\/Users\/Megan.Kelly\/AppData\/Local\/Microsoft\/Windows\/INetCache\/Content.Outlook\/6GQS29WF\/FTC%20Prop%20regs%20blog_v2.docx#_ftn11\" name=\"_ftnref11\"><sup><!-- [if !supportFootnotes]--><\/sup><sup><span style=\"font-size: 11.0pt; font-family: 'Calibri',sans-serif; mso-fareast-font-family: Calibri; mso-fareast-theme-font: minor-latin; mso-ansi-language: EN-US; mso-fareast-language: EN-US; mso-bidi-language: AR-SA;\">[11]<\/span><\/sup><!--[endif]--><\/a><sup> \u00a0<\/sup>An anti-abuse rule provides that a payment is treated as <i>not<\/i> made pursuant to a single-country license if the taxpayer knows, or has reason to know, that the required agreement misstates the territory in which the intangible property is used or overstates the amount of the royalty with respect to the part of the territory of the license that is solely within the foreign country imposing the tax.<a title=\"\" href=\"file:\/\/\/C:\/Users\/Megan.Kelly\/AppData\/Local\/Microsoft\/Windows\/INetCache\/Content.Outlook\/6GQS29WF\/FTC%20Prop%20regs%20blog_v2.docx#_ftn12\" name=\"_ftnref12\"><sup><!-- [if !supportFootnotes]--><\/sup><sup><span style=\"font-size: 11.0pt; font-family: 'Calibri',sans-serif; mso-fareast-font-family: Calibri; mso-fareast-theme-font: minor-latin; mso-ansi-language: EN-US; mso-fareast-language: EN-US; mso-bidi-language: AR-SA;\">[12]<\/span><\/sup><!--[endif]--><\/a><\/p>\n<p class=\"MsoNormal\">Importantly, the royalty agreement must generally be executed no later than the date on which the royalty is paid. A special transition documentation rule is provided for royalties paid on or before May 17, 2023. In that case, to satisfy the documentation requirement, the required agreement must be executed no later than May 17, 2023, and the agreement must state (whether in the terms of the agreement or in recitals) that royalties paid on or before the execution of the agreement are considered paid pursuant to the terms of the agreement. The required agreement must be maintained by the taxpayer and provided to the IRS within 30 days of a request by the Commissioner or another period as agreed between the Commissioner and the taxpayer.<a title=\"\" href=\"file:\/\/\/C:\/Users\/Megan.Kelly\/AppData\/Local\/Microsoft\/Windows\/INetCache\/Content.Outlook\/6GQS29WF\/FTC%20Prop%20regs%20blog_v2.docx#_ftn13\" name=\"_ftnref13\"><span class=\"MsoFootnoteReference\"><!-- [if !supportFootnotes]--><span class=\"MsoFootnoteReference\"><span style=\"font-size: 11.0pt; font-family: 'Calibri',sans-serif; mso-fareast-font-family: Calibri; mso-fareast-theme-font: minor-latin; mso-ansi-language: EN-US; mso-fareast-language: EN-US; mso-bidi-language: AR-SA;\">[13]<\/span><\/span><!--[endif]--><\/span><\/a><\/p>\n<p class=\"MsoNormal\">Taxpayers looking to make use of the single-country exception should evaluate their royalty arrangements to ensure that they qualify for the exception. Many taxpayers should be able to leverage work which has already been carried out to prepare and maintain contemporaneous transfer pricing documentation or for substantiation of foreign use of intangible property under the FDII regulations.<a title=\"\" href=\"file:\/\/\/C:\/Users\/Megan.Kelly\/AppData\/Local\/Microsoft\/Windows\/INetCache\/Content.Outlook\/6GQS29WF\/FTC%20Prop%20regs%20blog_v2.docx#_ftn14\" name=\"_ftnref14\"><span class=\"MsoFootnoteReference\"><!-- [if !supportFootnotes]--><span class=\"MsoFootnoteReference\"><span style=\"font-size: 11.0pt; font-family: 'Calibri',sans-serif; mso-fareast-font-family: Calibri; mso-fareast-theme-font: minor-latin; mso-ansi-language: EN-US; mso-fareast-language: EN-US; mso-bidi-language: AR-SA;\">[14]<\/span><\/span><!--[endif]--><\/span><\/a> In some cases, existing contracts may need to be revised: for example, where a royalty contract provides for exploitation of intangible property on a worldwide basis without separately stating the amount attributable to the specific jurisdiction imposing the withholding tax.<\/p>\n<p class=\"MsoNormal\">We strongly encourage taxpayers to reach out to their auditors and agree on an approach to estimate the impact of the 2022 FTC final and proposed regulations for year-end provision. Taxpayers who have already undertaken an analysis of their creditable taxes during prior quarters should revisit their analysis in order to determine whether early adoption of the 2022 FTC proposed regulations may be beneficial in their fact pattern.<\/p>\n<p class=\"MsoNormal\"><span style=\"background-image: initial; background-position: initial; background-size: initial; background-repeat: initial; background-attachment: initial; background-origin: initial; background-clip: initial;\">To learn more about GTM\u2019s\u00a0<\/span><a href=\"https:\/\/gtmtax.com\/corporate-tax-services\/tax-consulting-planning\/international-tax\/\">International Tax Services<\/a> <span style=\"background-image: initial; background-position: initial; background-size: initial; background-repeat: initial; background-attachment: initial; background-origin: initial; background-clip: initial;\">or to speak with someone who can guide you through the process,\u00a0<\/span><a href=\"https:\/\/gtmgrp.sharepoint.com\/sites\/TaxReformBlog\/Shared%20Documents\/Blogs\/Working%20Files\/gtmtax.com\/contact\"><span style=\"background-image: initial; background-position: initial; background-size: initial; background-repeat: initial; background-attachment: initial; background-origin: initial; background-clip: initial;\">contact us<\/span><\/a><span style=\"background-image: initial; background-position: initial; background-size: initial; background-repeat: initial; background-attachment: initial; background-origin: initial; background-clip: initial;\">.<\/span><\/p>\n<div>\n<p><!-- [if !supportFootnotes]--><\/p>\n<hr align=\"left\" size=\"1\" width=\"33%\" \/>\n<p><!--[endif]--><\/p>\n<div id=\"ftn1\">\n<p class=\"MsoFootnoteText\"><a title=\"\" href=\"file:\/\/\/C:\/Users\/Megan.Kelly\/AppData\/Local\/Microsoft\/Windows\/INetCache\/Content.Outlook\/6GQS29WF\/FTC%20Prop%20regs%20blog_v2.docx#_ftnref1\" name=\"_ftn1\"><span class=\"MsoFootnoteReference\"><!-- [if !supportFootnotes]--><span class=\"MsoFootnoteReference\"><span style=\"font-size: 10.0pt; font-family: 'Calibri',sans-serif; mso-fareast-font-family: Calibri; mso-fareast-theme-font: minor-latin; mso-ansi-language: EN-US; mso-fareast-language: EN-US; mso-bidi-language: AR-SA;\">[1]<\/span><\/span><!--[endif]--><\/span><\/a> T.D. 9959, 87 FR 276-376 (Jan. 4, 2022).<\/p>\n<\/div>\n<div id=\"ftn2\">\n<p class=\"MsoFootnoteText\"><a title=\"\" href=\"file:\/\/\/C:\/Users\/Megan.Kelly\/AppData\/Local\/Microsoft\/Windows\/INetCache\/Content.Outlook\/6GQS29WF\/FTC%20Prop%20regs%20blog_v2.docx#_ftnref2\" name=\"_ftn2\"><span class=\"MsoFootnoteReference\"><!-- [if !supportFootnotes]--><span class=\"MsoFootnoteReference\"><span style=\"font-size: 10.0pt; font-family: 'Calibri',sans-serif; mso-fareast-font-family: Calibri; mso-fareast-theme-font: minor-latin; mso-ansi-language: EN-US; mso-fareast-language: EN-US; mso-bidi-language: AR-SA;\">[2]<\/span><\/span><!--[endif]--><\/span><\/a> 87 FR 45018-45020 (Jul. 27, 2022).<\/p>\n<\/div>\n<div id=\"ftn3\">\n<p class=\"MsoFootnoteText\"><a title=\"\" href=\"file:\/\/\/C:\/Users\/Megan.Kelly\/AppData\/Local\/Microsoft\/Windows\/INetCache\/Content.Outlook\/6GQS29WF\/FTC%20Prop%20regs%20blog_v2.docx#_ftnref3\" name=\"_ftn3\"><span class=\"MsoFootnoteReference\"><!-- [if !supportFootnotes]--><span class=\"MsoFootnoteReference\"><span style=\"font-size: 10.0pt; font-family: 'Calibri',sans-serif; mso-fareast-font-family: Calibri; mso-fareast-theme-font: minor-latin; mso-ansi-language: EN-US; mso-fareast-language: EN-US; mso-bidi-language: AR-SA;\">[3]<\/span><\/span><!--[endif]--><\/span><\/a> REG-112096-22 (Nov. 22, 2022).<\/p>\n<\/div>\n<div id=\"ftn4\">\n<p class=\"MsoFootnoteText\"><a title=\"\" href=\"file:\/\/\/C:\/Users\/Megan.Kelly\/AppData\/Local\/Microsoft\/Windows\/INetCache\/Content.Outlook\/6GQS29WF\/FTC%20Prop%20regs%20blog_v2.docx#_ftnref4\" name=\"_ftn4\"><span class=\"MsoFootnoteReference\"><!-- [if !supportFootnotes]--><span class=\"MsoFootnoteReference\"><span style=\"font-size: 10.0pt; font-family: 'Calibri',sans-serif; mso-fareast-font-family: Calibri; mso-fareast-theme-font: minor-latin; mso-ansi-language: EN-US; mso-fareast-language: EN-US; mso-bidi-language: AR-SA;\">[4]<\/span><\/span><!--[endif]--><\/span><\/a> Prop. Reg. \u00a71.901-2(b)(4)(i).<\/p>\n<\/div>\n<div id=\"ftn5\">\n<p class=\"MsoFootnoteText\"><a title=\"\" href=\"file:\/\/\/C:\/Users\/Megan.Kelly\/AppData\/Local\/Microsoft\/Windows\/INetCache\/Content.Outlook\/6GQS29WF\/FTC%20Prop%20regs%20blog_v2.docx#_ftnref5\" name=\"_ftn5\"><span class=\"MsoFootnoteReference\"><!-- [if !supportFootnotes]--><span class=\"MsoFootnoteReference\"><span style=\"font-size: 10.0pt; font-family: 'Calibri',sans-serif; mso-fareast-font-family: Calibri; mso-fareast-theme-font: minor-latin; mso-ansi-language: EN-US; mso-fareast-language: EN-US; mso-bidi-language: AR-SA;\">[5]<\/span><\/span><!--[endif]--><\/span><\/a> Prop. Reg. \u00a71.901-2(b)(4)(i)(B)(2).<\/p>\n<\/div>\n<div id=\"ftn6\">\n<p class=\"MsoFootnoteText\"><a title=\"\" href=\"file:\/\/\/C:\/Users\/Megan.Kelly\/AppData\/Local\/Microsoft\/Windows\/INetCache\/Content.Outlook\/6GQS29WF\/FTC%20Prop%20regs%20blog_v2.docx#_ftnref6\" name=\"_ftn6\"><span class=\"MsoFootnoteReference\"><!-- [if !supportFootnotes]--><span class=\"MsoFootnoteReference\"><span style=\"font-size: 10.0pt; font-family: 'Calibri',sans-serif; mso-fareast-font-family: Calibri; mso-fareast-theme-font: minor-latin; mso-ansi-language: EN-US; mso-fareast-language: EN-US; mso-bidi-language: AR-SA;\">[6]<\/span><\/span><!--[endif]--><\/span><\/a> Prop. Reg. \u00a71.901-2(b)(4)(i)(C)(2).<\/p>\n<\/div>\n<div id=\"ftn7\">\n<p class=\"MsoFootnoteText\"><a title=\"\" href=\"file:\/\/\/C:\/Users\/Megan.Kelly\/AppData\/Local\/Microsoft\/Windows\/INetCache\/Content.Outlook\/6GQS29WF\/FTC%20Prop%20regs%20blog_v2.docx#_ftnref7\" name=\"_ftn7\"><span class=\"MsoFootnoteReference\"><!-- [if !supportFootnotes]--><span class=\"MsoFootnoteReference\"><span style=\"font-size: 10.0pt; font-family: 'Calibri',sans-serif; mso-fareast-font-family: Calibri; mso-fareast-theme-font: minor-latin; mso-ansi-language: EN-US; mso-fareast-language: EN-US; mso-bidi-language: AR-SA;\">[7]<\/span><\/span><!--[endif]--><\/span><\/a> Prop. Reg. \u00a71.901-2(b)(4)(i)(F)(1).<\/p>\n<\/div>\n<div id=\"ftn8\">\n<p class=\"MsoFootnoteText\"><a title=\"\" href=\"file:\/\/\/C:\/Users\/Megan.Kelly\/AppData\/Local\/Microsoft\/Windows\/INetCache\/Content.Outlook\/6GQS29WF\/FTC%20Prop%20regs%20blog_v2.docx#_ftnref8\" name=\"_ftn8\"><span class=\"MsoFootnoteReference\"><!-- [if !supportFootnotes]--><span class=\"MsoFootnoteReference\"><span style=\"font-size: 10.0pt; font-family: 'Calibri',sans-serif; mso-fareast-font-family: Calibri; mso-fareast-theme-font: minor-latin; mso-ansi-language: EN-US; mso-fareast-language: EN-US; mso-bidi-language: AR-SA;\">[8]<\/span><\/span><!--[endif]--><\/span><\/a> i.e., in the same way as U.S. tax law. <i>See<\/i> Sec. 861(a)(4) and Sec. 862(a)(4).<\/p>\n<\/div>\n<div id=\"ftn9\">\n<p class=\"MsoFootnoteText\"><a title=\"\" href=\"file:\/\/\/C:\/Users\/Megan.Kelly\/AppData\/Local\/Microsoft\/Windows\/INetCache\/Content.Outlook\/6GQS29WF\/FTC%20Prop%20regs%20blog_v2.docx#_ftnref9\" name=\"_ftn9\"><span class=\"MsoFootnoteReference\"><!-- [if !supportFootnotes]--><span class=\"MsoFootnoteReference\"><span style=\"font-size: 10.0pt; font-family: 'Calibri',sans-serif; mso-fareast-font-family: Calibri; mso-fareast-theme-font: minor-latin; mso-ansi-language: EN-US; mso-fareast-language: EN-US; mso-bidi-language: AR-SA;\">[9]<\/span><\/span><!--[endif]--><\/span><\/a> Prop. Reg. \u00a71.903-1(c)(2)(iii)(B).<\/p>\n<\/div>\n<div id=\"ftn10\">\n<p class=\"MsoFootnoteText\"><a title=\"\" href=\"file:\/\/\/C:\/Users\/Megan.Kelly\/AppData\/Local\/Microsoft\/Windows\/INetCache\/Content.Outlook\/6GQS29WF\/FTC%20Prop%20regs%20blog_v2.docx#_ftnref10\" name=\"_ftn10\"><span class=\"MsoFootnoteReference\"><!-- [if !supportFootnotes]--><span class=\"MsoFootnoteReference\"><span style=\"font-size: 10.0pt; font-family: 'Calibri',sans-serif; mso-fareast-font-family: Calibri; mso-fareast-theme-font: minor-latin; mso-ansi-language: EN-US; mso-fareast-language: EN-US; mso-bidi-language: AR-SA;\">[10]<\/span><\/span><!--[endif]--><\/span><\/a> Prop. Reg. \u00a71.903-1(c)(2)(iv)(A).<\/p>\n<\/div>\n<div id=\"ftn11\">\n<p class=\"MsoFootnoteText\"><a title=\"\" href=\"file:\/\/\/C:\/Users\/Megan.Kelly\/AppData\/Local\/Microsoft\/Windows\/INetCache\/Content.Outlook\/6GQS29WF\/FTC%20Prop%20regs%20blog_v2.docx#_ftnref11\" name=\"_ftn11\"><span class=\"MsoFootnoteReference\"><!-- [if !supportFootnotes]--><span class=\"MsoFootnoteReference\"><span style=\"font-size: 10.0pt; font-family: 'Calibri',sans-serif; mso-fareast-font-family: Calibri; mso-fareast-theme-font: minor-latin; mso-ansi-language: EN-US; mso-fareast-language: EN-US; mso-bidi-language: AR-SA;\">[11]<\/span><\/span><!--[endif]--><\/span><\/a> Prop. Reg. \u00a71.903-1(c)(2)(iv)(B) and (d)(9), Ex. 9.<\/p>\n<\/div>\n<div id=\"ftn12\">\n<p class=\"MsoFootnoteText\"><a title=\"\" href=\"file:\/\/\/C:\/Users\/Megan.Kelly\/AppData\/Local\/Microsoft\/Windows\/INetCache\/Content.Outlook\/6GQS29WF\/FTC%20Prop%20regs%20blog_v2.docx#_ftnref12\" name=\"_ftn12\"><span class=\"MsoFootnoteReference\"><!-- [if !supportFootnotes]--><span class=\"MsoFootnoteReference\"><span style=\"font-size: 10.0pt; font-family: 'Calibri',sans-serif; mso-fareast-font-family: Calibri; mso-fareast-theme-font: minor-latin; mso-ansi-language: EN-US; mso-fareast-language: EN-US; mso-bidi-language: AR-SA;\">[12]<\/span><\/span><!--[endif]--><\/span><\/a> Prop. Reg. \u00a71.903-1(c)(2)(iv)(C).<\/p>\n<\/div>\n<div id=\"ftn13\">\n<p class=\"MsoFootnoteText\"><a title=\"\" href=\"file:\/\/\/C:\/Users\/Megan.Kelly\/AppData\/Local\/Microsoft\/Windows\/INetCache\/Content.Outlook\/6GQS29WF\/FTC%20Prop%20regs%20blog_v2.docx#_ftnref13\" name=\"_ftn13\"><span class=\"MsoFootnoteReference\"><!-- [if !supportFootnotes]--><span class=\"MsoFootnoteReference\"><span style=\"font-size: 10.0pt; font-family: 'Calibri',sans-serif; mso-fareast-font-family: Calibri; mso-fareast-theme-font: minor-latin; mso-ansi-language: EN-US; mso-fareast-language: EN-US; mso-bidi-language: AR-SA;\">[13]<\/span><\/span><!--[endif]--><\/span><\/a> Prop. Reg. \u00a71.903-1(c)(2)(iv)(D).<\/p>\n<\/div>\n<div id=\"ftn14\">\n<p class=\"MsoFootnoteText\"><a title=\"\" href=\"file:\/\/\/C:\/Users\/Megan.Kelly\/AppData\/Local\/Microsoft\/Windows\/INetCache\/Content.Outlook\/6GQS29WF\/FTC%20Prop%20regs%20blog_v2.docx#_ftnref14\" name=\"_ftn14\"><span class=\"MsoFootnoteReference\"><!-- [if !supportFootnotes]--><span class=\"MsoFootnoteReference\"><span style=\"font-size: 10.0pt; font-family: 'Calibri',sans-serif; mso-fareast-font-family: Calibri; mso-fareast-theme-font: minor-latin; mso-ansi-language: EN-US; mso-fareast-language: EN-US; mso-bidi-language: AR-SA;\">[14]<\/span><\/span><!--[endif]--><\/span><\/a> Reg. \u00a71.250(b)-4(d)(3)(iv)<\/p>\n<\/div>\n<\/div>\n\n    <\/div>\n<\/div><\/div>","protected":false},"template":"","meta":{"_acf_changed":false},"class_list":["post-2080","insight","type-insight","status-publish","hentry"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.8 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>New Proposed FTC Regulations: Relaxing the Cost Recovery and Attribution Requirements<\/title>\n<meta name=\"description\" content=\"Treasury has issued a set of technical corrections to the 2022 FTC final regulations in July 2022, and an additional set of new proposed FTC regulations in November 2022, known as the 2022 FTC proposed regulations. 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