Practitioners should be cognizant of the treatment of DREs by other countries. 8° Not only can the different treatment by a foreign country present traps for the unwary, but they can also produce significant planning opportunities for U.S. individuals and businesses. Obama Proposal. The Obama administration recently released its 2010 budget proposals, which included a proposal that would make a regulatory change to the check-the-box regulations requiring some foreign subsidiaries to be treated as separate corporations for U.S. federal tax purposes. ®* The proposal is designed to prohibit the shifting of income from one foreign subsidiary to another in a tax-haven country. © Under the proposal, a foreign eligible entity with a single owner that is organized or created in a country other than that of its single owner would be treated as a corporation for all federal tax purposes. ® Existing eligible entities would undergo a deemed conversion into a corporation under the proposal, resulting in the entities incurring the usual tax consequences related to a conversion (e.g., triggering of dual-consolidated losses). Except in cases of U.S. tax avoidance, the proposal generally would not apply to a first-tier foreign eligible entity wholly owned by a U.S. person. @ If adopted, the proposal would not take effect until 2011. °° Given the Obama Administration's heightened scrutiny of offshore tax havens and international tax abuses, this proposal is one to monitor closely. Conclusion There are now several instances in which DREs are not really disregarded for tax purposes. In addition, various proposals would increase the number of exceptions/modifications to the general rule that a DRE is a “tax nothing.” It is important for practitioners to keep this assortment of disclaimers in mind in advising clients with respect to tax planning using DREs. The erosion of the check-the-box regulations and other DRE provisions continues to be a trap for the unwary. “i Rev. Rul. 2004-77,