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Tax News: GILTI Rules Retroactively Amended


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7/22/2020
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Retroactive GILTI changes are the latest tax update to impact US entrepreneurs overseas. The changes allow an exception for income subject to high tax (and other criteria).

Internal Revenue Service ("IRS") issued an additional regulation package on the global intangible low-taxed income ("GILTI") Sec. 951A,  requiring all 10% U.S. shareholders of controlled foreign corporations (CFCs) to include in their gross income their share of the CFC’s GILTI for that tax year (the inclusion amount).

The provision applies to tax years of foreign corporations beginning after Dec. 31, 2017, and to the U.S. shareholders’ tax years within which the foreign corporations’ tax years end.

The inclusion amount is intended to subject income earned by a CFC to U.S. tax on a current basis and is determined using a formula. A 10% return is attributed to certain tangible assets (qualified business asset investment, or QBAI), and each dollar of certain income above that is effectively treated as intangible income.

Futher, the IRS issued new proposed rules (REG-127732-19) addressing various aspects of the GILTI high-tax exclusion. The Proposed Rules also provide for a single election under Sec. 954(b)(4) for purposes of both Subpart F income and tested income (the “high-tax exception”).

For any questions or assistance, please contact the Tax Attorneys at Fazzio Lawwe are in your corner!



Category: Tax


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