Washington, D.C. (November 24, 2025) – In a letter sent to the Department of the Treasury and the Internal Revenue Service (IRS), the American Institute of CPAs (AICPA) submitted recommendations on the “all or nothing” approach to dual consolidated losses (DCL) as requested in Notice 2025-44. This approach means that if even a portion 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 deductions 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 is asking Treasury and the IRS to allow an exception for these permanently disallowed amounts so companies aren’t penalized unnecessarily.
The AICPA recommends 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. This ensures companies aren’t penalized for deductions that don’t create a risk of double use. Additionally in the letter, the AICPA provided language that will address the issue as an exception to the existing general rule. This language employs a narrower provision in the computation of a DCL under Treas. Reg. § 1.1503(d)-5 and would fill a gap in the existing regulations and ensure that the “blunt” nature of the “all or nothing” approach does not inappropriately disallow deductions that do not give rise to a “double dipping” concern.
“The AICPA’s recommended language would not require complex stacking or ordering rules and would not increase the administrative complexity and burden,” said Reema Patel, Senior Manager for Tax Policy & Advocacy for the AICPA. “Rather, we believe that the framework for the documentation required to substantiate the permanent disallowance already exists in the current regulations, and a narrow exception can be included without altering the overall architecture of the regulations.”
About the American Institute of CPAs
The American Institute of CPAs (AICPA) is the world’s largest member association representing the CPA profession, with 397,000 members and a history of serving the public interest since 1887. AICPA members represent many areas of practice, including business and industry, public practice, government, education, and consulting. A founding member of the Association of International Certified Professional Accountants, the AICPA sets ethical standards for the profession, attestation standards, and U.S. auditing standards for private companies, not-for-profit organizations, and federal, state, and local governments. It develops and grades the Uniform CPA Examination, offers specialized credentials, partners across the profession to build future talent, and drives continuing education to advance the vitality, relevance, and quality of the profession.
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Contact: Veronica L. Vera
202-434-9215
Veronica.Vera@aicpa-cima.com