My study examines how incentives to take advantage of U.S. accounting rules affect the profitability of U.S. firms and foreign investments. Prior studies find that the U.S. tax on foreign earnings motivates firms to accumulate earnings abroad and undertake more, potentially value-destroying, foreign investments. However, these studies do not differentiate between the effect of tax and financial reporting incentives to invest foreign earnings abroad. Under U.S. accounting rules, firms can also delay financial statement recognition of tax expense on foreign earnings that are permanently reinvested. I investigate the extent to which financial reporting incentives to avoid reporting tax expense contribute to poorer foreign investment profitability.