Proposed Regulations on GILTI Inclusions

U.S. shareholders of controlled foreign corporations (CFCs) are required to include in income their global intangible low-taxed income (GILTI), as a result of the addition of IRC §951A by the Tax Cuts and Jobs Act. The rules apply to tax years of foreign corporations beginning after December 31, 2017, and to tax years of U.S. shareholders in which or with which such tax years of foreign corporations end. Intangible income is determined according to a formulaic approach that assigns a 10-percent return to tangible assets (qualified business asset investment (QBAI)) and each dollar above the return is treated as an intangible assets.

Proposed regulations have been issued that provide the best guidance on the computation of the GILTI inclusion. The proposed regulations provide a numbers of new rules, including rules for consolidated groups, domestic partnerships and partners, and required basis adjustments. The proposed regulations also contain a number of anti-abuse rules to be aware of and impose new reporting requirements. The rules for GILTI are complex and the guidance issued provide additional rules for computing the correct GILTI inclusion. To ensure that the inclusion is correctly computed, we would like to assess your situation in light of this new guidance

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