Document Type

Article

Publication Date

9-2025

Abstract

This past January, in conjunction with the issuance of a final regulation (T.D. 10022) that treats income from defined cloud transactions as income from services, Treasury and the IRS released a proposed regulation (REG-107420-24) on the sourcing of that income. In 2019 a Treasury official had asked the tax community for feedback on whether specific cloud transaction sourcing rules were needed, and the preamble to a 2019 proposed regulation asked for comments on “administrable rules for sourcing income from cloud transactions in a manner consistent with sections 861 through 865.” The feedback was “split almost evenly with regard to whether specific sourcing rules are needed in this area, with a narrow majority expressing support for such guidance,” the preamble to the 2025 proposed regulation explains.

Comments

Reprinted with the permission of Tax Analysts.

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