GILTI Calculations for Individual CFC Shareholders: New Section 951A Tax on Foreign Intangible Income

Changes to Subpart F Controlled Foreign Corporation Treatment, Recognizing QBAI and More

Note: CLE credit is not offered on this program

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


Conducted on Thursday, May 23, 2019

Recorded event now available

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Program Materials

This webinar will provide tax advisers with a practical guide to the tax reporting challenges of the global intangible low taxed income (GILTI) provisions in the new tax reform bill. The panel will focus on identifying the differences in treatment of controlled foreign corporations (CFC) income under the new regime. The panel will detail the tax calculations and reporting requirements for taxpayers with income subject to GILTI and describe planning opportunities to minimize the tax impact on individuals with CFC holdings.

Description

A provision in the tax reform law that has an unexpected impact on individual taxpayers is Section 951A tax on the GILTI of U.S. shareholders of CFCs. Tax advisers must immediately grasp the details to avoid costly tax consequences for their clients engaged in cross-border activities.

The new law ends prior deferral treatment and subjects "U.S. shareholders" of CFCs, defined as U.S. persons owning at least 10% of the vote or value of a specified foreign corporation, to current tax on any income more than 10% of the CFC's qualified business asset investment (QBAI).

The QBAI calculation includes tangible business personal property but excludes intangible property amortizable under Section 197. Taxpayers must report this income as a new category of Subpart F income. This hits tech companies, service providers, and firms with high intangible assets particularly hard.

Critical to the tax impact of GILTI is the disparate treatment between corporate and individual taxpayers. Tax reform grants corporate taxpayers significant offsets as well as a lower rate. C corporations may reduce GILTI by 50%, receive a credit for up to 80% of foreign income taxes paid or accrued by the CFC, and pay a lower maximum tax rate of 21%. Individuals owning CFC shares aren't eligible for these reductions, resulting in a much higher tax impact on individuals than on corporate entities.

Listen as our expert panel provides a thorough and practical guide to the mechanics of identifying, calculating and reporting GILTI income for individual taxpayers under the new Section 951A.

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Outline

  1. Section 951A provisions
  2. Prior Subpart F/CFC treatment
  3. Identifying QBAI
  4. Calculating GILTI
  5. Planning opportunities to minimize tax impact of foreign intangible holdings

Benefits

The panel will discuss these and other relevant topics:

  • Determining whether an individual taxpayer is subject to GILTI tax under Section 951A
  • Identifying QBAI
  • Calculating GILTI on CFC income
  • Foreign taxes that will reduce U.S. tax on GILTI
  • Planning opportunities for clients with CFC assets to minimize GILTI tax

Faculty

Hadlow, Fabrizia
Fabrizia Hadlow
Managing Director - International Tax Services
BDO USA

Ms. Hadlow focuses on providing tax consulting and compliance services to multinational corporations, privately held...  |  Read More

Reichelt, Jordan
Jordan Reichelt

CPA
Spott Lucey & Wall

Mr. Reichelt provides accounting and compliance services to various businesses including multistate professional...  |  Read More

Gelernter, Josh
Josh Gelernter

International Tax Senior Manager
Withum Smith+Brown

Mr. Gelernter's specialties are international tax services, primarily reorganizations and restructurings.

 |  Read More

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