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February 12, 2019
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Foreign-Derived Intangible Income Deduction: Is your company eligible?

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Enacted by the Tax Cuts and Jobs Act, the Foreign-Derived Intangible Income (FDII) deduction establishes preferential tax treatment for domestic C corporations serving foreign markets. The deduction is equal to 37.5% of the C corporation’s foreign-derived intangible income.

Companies with eligible income can take advantage of this incentive by claiming a permanent deduction against taxable income, thus lowering the cost to enter foreign markets. The deduction effectively reduces the tax rate on qualifying foreign derived income from 21% to as low as 13.125% through 2025. Companies, large and small, public and private, may take advantage of the deduction. In many cases, the tax savings are substantial.

Your C corporation may qualify if you have income from any of the following:

  • Sales of property to foreign persons that result in foreign use.
  • Sales include any lease, license, exchange, or other disposition.
  • Services provided to any person not located within the U.S. or any services provided with respect to property not located within the U.S.

Elliott Davis has prepared a downloadable PDF detailing information on the Foreign-Derived Intangible Income deduction and how we can assist with more information.

The information provided in this communication is of a general nature and should not be considered professional advice. You should not act upon the information provided without obtaining specific professional advice. The information above is subject to change.

“Elliott Davis" is the brand name under which Elliott Davis, LLC (doing business in North Carolina and D.C. as Elliott Davis, PLLC) and Elliott Davis Advisory, LLC and its subsidiary entities provide professional services. Elliott Davis, LLC and Elliott Davis Advisory, LLC and its subsidiary entities practice as an alternative practice structure in accordance with the AICPA Code of Professional Conduct and applicable law, regulations and professional standards. Elliott Davis, LLC is a licensed independent CPA firm that provides attest services to its customers. Elliott Davis Advisory, LLC and its subsidiary entities provide tax and business consulting services to their customers. Elliott Davis Advisory, LLC and its subsidiary entities are not licensed CPA firms. The entities falling under the Elliott Davis brand are each individual firms that are separate legal and independently owned entities and are not responsible or liable for the services and/or products provided by any other entity providing services and/or products under the Elliott Davis brand. Our use of the terms “our firm” and “we” and “us” and terms of similar import, denote the alternative practice structure conducted by Elliott Davis, LLC and Elliott Davis Advisory, LLC.

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