New Foreign Tax Credits: Applying the Final and Proposed Regulations and Preparing Form 1118

Categorizing Income, Allocating R&E and Stewardship Expenses, and Reporting Foreign Tax Redeterminations

Note: CLE credit is not offered on this program

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

Conducted on Wednesday, June 10, 2020

Recorded event now available

or call 1-800-926-7926
Course Materials

This course will provide an analysis of the proposed and final regulations issued in December 2019 and discuss the preparation of Form 1118 for tax practitioners and advisers grappling with these calculations.

Description

The foreign tax credit offers a tax reduction for U.S. taxation of foreign source income. The instructions and form itself were recently updated to include the multitude of changes made by tax reform and recently released final and proposed regulations. Adding to the confusion are the differing effective dates for these changes varying from years beginning after Dec. 31, 2017, to years ending on or after Dec. 16, 2019.

Added to the passive and general categories of income by the recent tax act, were two new categories for GILTI and foreign branch income. The final regulations firm-up the definition of foreign branch income and where gains and losses are reported from dispositions of these branches. The December proposed regulations (REG-105495-19) explain the allocation of research and experimentation (R&E) expenses and stewardship expenses, and the application of foreign tax redeterminations (FTRs) under Section 905.

In addition to the preparation of Form 1118 by corporations, the preparation of this form could be required of individuals who, making a Section 962 election, are taxed as corporations. With schedules A-J and Section F divided into three parts, the complexities of preparing Form 1118 and calculating this valuable credit has grown phenomenally.

Listen as our panel of experts reviews the complexities of the preparation of Form 1118, Foreign Tax Credit, the final and proposed regulations, and steps for maximizing this credit.

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Outline

  1. Changes under recent tax reform
  2. Final regulations
    1. New basket rules
    2. Transitional rules for SLL, OFL, and ODL
  3. Proposed regulations
    1. Allocating R&E expenses
    2. Stewardship expenses
    3. Foreign tax redeterminations
    4. Other changes
  4. Preparing Form 1118

Benefits

The panel will cover these and other key issues:

  • Allocating R&E expenses under the proposed regulations
  • Allocating stewardship expenses
  • Preparation of Form 1118, Foreign Tax Credit: corporations
  • Effective dates of proposed changes to FTC calculations

Faculty

Love, Ariel
Ariel Love
Attorney
Fenwick & West

Ms. Love focuses her practice on a broad variety of domestic and international tax planning and tax controversy...  |  Read More

Murwanto, Kenneth
Kenneth Murwanto
Senior Manager, International Tax
RSM US

Mr. Murwanto leads the firm’s international tax practice in Orange County and the international tax reform...  |  Read More

Stefanski, Erika
Erika I. Stefanski, CPA, MST
Senior Director, International Tax
RSM US

Ms. Stefanski leads the firm’s foreign tax credit team. She has been servicing clients in the Great Lakes region...  |  Read More

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