In Tax Notes, Loren Ponds discussed the possible impact of a recent Internal Revenue Service (IRS) generic legal advice memorandum (GLAM) which concluded that a taxpayer's foreign-derived intangible income (FDII) deduction must be reduced by deferred compensation expense attributable to services provided in years prior to the effective date of FDII. This analysis in the memorandum reflects a change of course for the IRS, which had concluded in prior guidance in 2009 and 2017 that expenses that related to years prior to the effective date of prior law section 199 were allocated and apportioned based on a factual relationship between the prior year expense and the taxpayer's section 199 income in the current year. Ponds said she expects the issue to arise more as 2018 audits move forward. She added that the guidance that was available to taxpayers at the time they filed their returns was instructive and said declining to allocate DCE to DEI and FDDEI was a reasonable position to take, but that whether taxpayers would end up litigating the issue was unclear.