Tax Bytes: Week of December 22, 2025

Tax developments

Foreign sovereign investors alert – Review investment portfolios in light of newly issued section 892 regulations

On December 15, 2025, the Treasury and IRS published final and temporary regulations (TD 10042) and proposed regulations (REG-101952-24) under section 892 of the Internal Revenue Code that will affect how foreign governments structure their investments in US debt and evaluate control of a commercial entity. The proposed regulations create a rebuttable presumption that all debt acquisitions are to be treated as commercial activities and address when a foreign government has “effective control” of a commercial entity. The final and temporary regulations finalize proposed regulations from 2011 and 2022 with modifications.

Read our full alert here.

IRS issues OBBBA guidance: Subpart F, foreign tax credit limits and section 250 DEI exclusions

In furtherance of its efforts to provide guidance related to the implementation of tax law changes that are part of the One Big Beautiful Bill Act of 2025 (OBBBA), on December 4, 2025, the IRS issued:

• Notice 2025-75: Previews forthcoming proposed regulations relating to the revisions to the pro rata share rule for allocating subpart F income inclusions in section 951(a)(2), and particularly the transition rule under which certain dividends paid after June 28, 2025 are not taken into account for purposes of reducing a US shareholder’s pro rata share of subpart F income under pre-OBBBA section 951(a)(2)(B)
  • Read our full alert here.
• Notice 2025-77: Addresses limitations on foreign tax credits related to certain distributions that are imposed by new section 960(d)(4), effective for taxable years ending after June 28, 2025
  • Read our full alert here.
• Notice 2025-78: Previews proposed regulations that will provide guidance on which income and gain must be excluded from the determination of deduction-eligible income (DEI) under section 250(b)(3)
  • Read our full alert here.

6-7 employee benefit compliance priorities for year end

As plan sponsors close the 2025 plan year and look to 2026, it’s important to consider year-end compliance action items as well as those arriving in 2026. In this alert, our Employee Benefits and Executive Compensation Team presents 6-7 compliance considerations for your year end.

Read our full alert here. 

Recent Eversheds Sutherland Tax insights 

Where Things Stand Now That Promoter Penalties Have Been Ruled Constitutional

When tax disputes arise, most think of IRS battles with taxpayers. But the IRS also targets “promoters” of aggressive transactions – and those investigations can be serious. In this article, Partner Hale Sheppard explains Section 6700 promoter penalties, a recent ruling on immediate assessments, constitutional arguments still in play, and why promoter investigations and litigation may be increasing.

Irish Revenue and Department of Finance launch eWHT consultation

Luxembourg Modernises the S.à r.l. incorporation regime with positive impact for general partners and holding structures

New Irish Revenue guidance clarifies rules on VAT treatment of establishing and managing pension schemes

Reforms to transfer pricing, permanent establishment and Diverted Profits Tax

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If you have any questions about this Legal Briefing, please feel free to contact any of the attorneys listed or the Eversheds Sutherland attorney with whom you regularly work.