Calculating Foreign Sourced Dividends-Received Deduction After Tax Reform

New Section 245A, Intersection of DRD Regime With Other Foreign Income Tax Provisions

Recording of a 110-minute CPE webinar with Q&A


Conducted on Tuesday, January 8, 2019

Recorded event now available

or call 1-800-926-7926
Program Materials

This webinar will provide corporate tax professionals with a thorough and practical guide to calculating and claiming the dividends-received deduction (DRD) for the foreign-source portion of dividends received from specified 10%-owned foreign corporations by domestic U.S. shareholders of those foreign corporations. The panel will discuss how to identify the guidelines for claiming the deduction, list the qualifications for small business investment treatment, and describe the changes made to DRD calculations by the 2017 tax reform act.

Description

A critical provision mitigating the risk of dual taxation for U.S. corporations with overseas operations is the DRD, which exempts certain foreign-sourced portion of dividends received by a U.S. parent from specified foreign corporations in which the U.S. entity holds at least 10% ownership.

Section 245 provides the framework for claiming the deduction and specifies a broad interpretation of what constitutes a "dividend received." U.S. corporations that own stock of a foreign corporation through a partnership or other entity structure may claim the deduction by "indirect participation" on the same basis as if the U.S. corporation owned the stock directly.

However, there are significant restrictions and qualifications for claiming the Foreign DRD and corp tax advisers and compliance professionals must thoroughly understand the rules governing what types of income are eligible for the DRD. The calculations and determination of eligible dividend income can be extremely challenging for even the most seasoned tax practitioners. Further complicating matters are the changes the 2017 tax reform law made to the DRD regime, most notably in the treatment of Subpart F income and the 100% deduction for certain foreign source dividends provided in Section 245A.

Listen as our experienced panel provides a practical guide to navigating the DRD regime for foreign-sourced dividend income earned by U.S. corporations from specified 10% owned foreign corporations.

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Outline

  1. Foreign dividends received deduction provisions in general
  2. Ownership thresholds including "indirect participation"
  3. Determining what income qualifies as foreign dividends
  4. Section 245A provisions
  5. Calculation rules

Benefits

The panel will discuss these and other relevant topics:

  • Identifying which types of income are eligible for deduction as "foreign dividends"
  • Changes in percentage deduction to correspond with lowered U.S. corporate tax rates
  • How the DRD regime intersects with other provisions such as GILTI and the deemed repatriation rules
  • Section 245A changes to the foreign DRD rules
  • Calculating the deduction

Faculty

Bodoh, Devon
Devon M. Bodoh
Partner
Weil Gotshal & Manges

Mr. Bodoh advises clients on cross-border mergers, acquisitions, inversions, spin-offs, other divisive strategies,...  |  Read More

Dawley, Kyle
Kyle Dawley, J.D., CPA
Principal, Global Tax Services
CliftonLarsonAllen

Mr. Dawley has spent a vast majority of his career focusing on the international tax needs of multinational businesses...  |  Read More

Featherman, Greg
Greg W. Featherman
Principal
KPMG

Mr. Featherman advises KPMG partners, employees and clients on corporate tax matters including domestic and...  |  Read More

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