The IRS put taxpayers on notice that it plans to deny tax deductions shareholders claim for the loss in market value of shares in corporations that disclosed accounting fraud or other illegal conduct. A deduction can be claimed for loss in share
value, but only when the stock is sold or it becomes “wholly worthless.” The announcement is Notice 2004-27 . . . . The Bush administration backed off rules the IRS issued in 1998 that would have denied US corporations foreign tax credits from transactions that are expected to produce an insubstantial economic profit in relation to the value of the foreign tax credits generated. The US Treasury said in Notice 2004-19 that it will apply general tax law principles to deny foreign tax credits in such cases without having to resort to a rigid mathematical test.