The AICPA has asked the IRS and Treasury to allow an exception to its “all or nothing” approach to dual consolidated losses (DCLs) so that companies aren’t unnecessarily penalized.
In response to a request for comments in Notice 2025-44, the AICPA pointed out that the current approach to DCLs means that if even a portion of the DCL is used in a foreign country, the entire loss cannot be deducted in the U.S.
The concern of “double dipping” cannot occur if the items of deduction or loss that represent a permanent difference between the U.S. federal income tax law and foreign law are excluded from the DCL calculation.
The AICPA recommended Treasury and the IRS issue guidance stating that if the “all or nothing” approach is retained, any expenses that can never be used under foreign tax law should be left out of the U.S. loss calculation. Read more.