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Former President Donald Trump (R) decisively won the US presidential election on 6 November, defeating Vice President Kamala Harris (D). In Congress, Republicans will take control of the Senate and hold at least 53 Senate seats, with several races too close to call as we go to press. Control of the House remains unclear, however.

Whether there is a Republican election sweep — meaning the presidency and both chambers of Congress — or divided government when House races are decided will determine if Republicans can proceed with what they have suggested will be a massive budget reconciliation bill to extend Tax Cuts and Jobs Act (TCJA) tax provisions at the end of 2025, as well as other possible tax measures. If Democrats take control of the House, Republicans will be required to negotiate with Democrats to craft a bill to meet the 60-vote Senate filibuster threshold in order to avoid the expiration of TCJA provisions at the end of 2025 and avoid the so-called tax cliff.

Following the election, House Speaker Mike Johnson (R-LA) expressed confidence that Republicans would retain control of the chamber in 2025.

The Speaker, in mid-September, promised a "Day One" focus on corporate tax policy if there is Republican control of the House, Senate and White House next year. Among other things, the House Speaker said Republicans would ensure the US is the "preeminent location for the investment and innovation and technology by … ensuring a strong FDII incentive to encourage U.S. ownership of intellectual property and restoring the 100% [R&D] expensing provision." The foreign-derived intangible income (FDII) deduction of 37.5% (for a 13.125% rate) is set to drop to 21.875% (for a 16.40625% rate) after 2025.

In a "Dear Colleague" letter dated 6 November, House Majority Leader Steve Scalise (R-LA) indicated the TCJA will be among the top priorities for the Republican majority's 100-day agenda if Republicans are able to hold the majority.

Looking ahead to next year, Senator Mike Crapo (R-ID) is set to become the next Chairman of the Senate Finance Committee. If Republicans maintain control of the House, it would increase the likelihood of legislation to extend expiring TCJA provisions to all income groups; in contrast, a Democratic-led House would likely insist that the provisions be pared back for higher incomes.

During the campaign, the President-elect proposed a 15% "Made in America" tax rate for companies that make products in America, a family tax credit for caregivers who care for a parent or loved one, exempting tip and overtime income and Social Security benefits from tax, making auto loan interest tax deductible and restoring the state and local tax (SALT) deduction. It is unclear how Congress will address such proposals and whether there will be revenue offsets.

Congress returns to Washington for a lame-duck session the week of 11 November.

An IRS official recently said the first tranche of long-awaited previously taxed earnings and profits (PTEP) proposed regulations will be released before the end of 2024. The official was quoted as saying the proposed rules would include guidance on IRC Section 961(c) basis adjustments — specifically, amount, location and timing. Nonrecognition transactions will not be addressed, though taxpayers can also expect some, but not all, partnership issues to be included in the initial PTEP package, according to the IRS official.

The first tranche of PTEP guidance will not address rules covering inbound transfers in Notice 2024-16, the official said. Recall Notice 2024-16, released in December 2023, provides that IRC Section 961(c) basis of acquired CFCs carries over to domestic acquiring corporations in certain covered inbound transactions. The official declined to say when PTEP guidance on those issues will be released.

The IRS official also said proposed IRC Section 987 regulations on foreign currency gain or loss reportedly will be released by year-end, as well. Commenting on that package, a Treasury official said the coming proposed 987 rules will not cover all related topics, as some technical issues are still being worked out.

And a senior Treasury official recently was quoted as saying the US government will release a Notice by year-end on voluntary "Amount B." BEPS Pillar One Amount B is aimed at simplifying and streamlining the application of the arm's-length principle to baseline marketing and distribution activities, with a particular focus on the needs of low-capacity countries. In February 2024, the OECD published a final report on Pillar One Amount B.

The official disclosed that the US government is continuing to discuss with other countries the adoption of a mandatory Amount B. He indicated that some of the globe's larger economies are among the holdouts.