GILTI Calculations for Individual CFC Shareholders: 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, February 13, 2020

Recorded event now available

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Program Materials

This webinar will provide tax advisers with a practical guide to the global intangible low-taxed income (GILTI) provisions in the tax reform bill. The panel will detail the tax calculations and reporting requirements for taxpayers with GILTI inclusions and describe planning opportunities to minimize the tax impact on individuals with GILTI inclusions.

Description

Section 951A requires U.S. shareholders of controlled foreign corporations (CFCs) to include in gross income, the shareholder’s GILTI for the tax year. Tax advisers must be able to identify the tax consequences for their clients that are U.S. shareholders in CFCs.

GILTI is an anti-deferral regime which may subject U.S. shareholders (as defined in Section 951(b)) of a CFC to tax on all or a portion of the CFC’s income. GILTI is calculated under a complex formula but essentially requires U.S. shareholders to include into gross income CFC net income (subject to certain exceptions) less a routine return on certain CFC tangible depreciable property (qualified business asset investment or QBAI) with adjustments for certain CFC interest expense. QBAI generally includes tangible depreciable personal property used to generate CFC tested income but does not include intangible property.

Critical to the tax impact of GILTI is the disparate treatment between corporate and individual taxpayers. C corporations are generally entitled to a Section 250 deduction for GILTI and the Section 78 gross up attributable to the GILTI inclusion and also an indirect foreign tax credit for certain foreign income taxes paid or accrued by the CFC subject to foreign tax credit limitation rules. Absent a Section 962 election, individual U.S. shareholders aren't eligible for these benefits, 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.

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Outline

  1. Section 951A overview
  2. Calculating GILTI
  3. Treatment of domestic partnerships and their partners
  4. Planning opportunities for individuals to minimize the tax impact of GILTI
  5. Final vs. proposed GILTI high tax exclusion

Benefits

The panel will review these and other essential matters:

  • When an individual is subject to tax under IRC 951A
  • Calculating QBAI
  • Determining a U.S shareholder’s pro rata share of CFC tested items
  • The application of GILTI to domestic partnerships and their partners
  • The benefits and cons to a Section 962 election

Faculty

Dokko, Sean
Sean Dokko, J.D., LL.M.
Managing Director, National Tax Office - International Tax Services
BDO USA

Mr. Dokko focuses on international tax planning and consulting for both inbound and outbound clients. He has experience...  |  Read More

Zhang, Libin
Libin Zhang

Partner
Fried Frank Harris Shriver & Jacobson

Mr. Zhang is a tax partner in Fried Frank's New York office. Prior to joining the firm in 2019, he was a tax...  |  Read More

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