The HESU attribution rules, however, become complicated if the HESU owns an interest in another HESU, a FBSU, a Transparent Entity, a partnership, or a grantor trust.
In Year 1, FBSU takes a $ 40 depreciation deduction for U.
A DRC can own a FBSU, even if the foreign branch activities are located in the same country as the place of organization or incorporation of the DRC.
These formulaic modified interest attribution rules do not apply if the applicable foreign country determines the FBSU net income taxation based on a strict books and records method.
For instance, assume USCo's FBSU incurs a $100 DCL in Year 1.