Subpart F vs. GILTI: Strategies for U.S. Companies, Foreign Tax Credit Rules, New GILTI High-Tax Exclusion

Planning Subpart F Inclusion to Use Excess Foreign Tax Credit Carryovers

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

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Conducted on Tuesday, August 18, 2020

Recorded event now available

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Course Materials

This course will provide corporate tax decisionmakers and advisers with a practical overview of Subpart F tax treatment of controlled foreign corporations (CFCs). The panel will detail the intersection of Subpart F with GILTI and the foreign tax credit regulations, and describe strategies in which it can be advantageous for U.S. multinational companies to report Subpart F income rather than claiming the 50% deduction for GILTI under Section 250.


GILTI provisions continue to reverberate in the area of tax attributable to foreign subsidiary income and activities. IRC 951A, which created GILTI, increased the number of foreign subsidiaries subject to these provisions and expanded the reach of the historic Subpart F regime.

The Subpart F rules require U.S. shareholders of CFCs to treat certain types of income as taxable in the current year. Section 951A added a layer of current income inclusion for CFC shareholders on global low-taxed income and a companion provision--new Section 250--provides U.S. corporate shareholders with a 50% deduction, which reduces their effective U.S. tax rate on the included income.

The final regulations issued June 2019 generally affirmed the proposed regulations but incorporated changes to the treatment of domestic partnerships for purposes of determining GILTI income of a partner and modified the anti-abuse provisions. The proposed and final GILTI high-tax exception regulations issued July 2020, however, which allow the exclusion of income taxed at a high rate (90% of the highest rate in Section 11, currently 18.9% or greater) impact taxpayers significantly.

In certain circumstances, a U.S. corporation may achieve more favorable treatment by structuring activities to plan on Subpart F inclusion to maximize the value of excess credits. Tax advisers must be able to evaluate the overall tax treatment of excess foreign tax credits to determine whether to plan into GILTI or Subpart F.

Listen as our authoritative panel of international tax practitioners reviews the Subpart F rules, the final and proposed GILTI high-tax exception regulations, and provides a practical guide to determine CFC ownership, tax, and reporting obligations.



  1. Subpart F
    1. Definition of a controlled foreign corporation and U.S. shareholder
    2. Additional income included in the calculation base
    3. Downward attribution rules
  2. Section 951A GILTI rules
  3. Final regulations
  4. July 2020 Proposed and final GILTI high-tax exception regulations
  5. Treatment of excess foreign tax credits GILTI vs. Subpart F income


The panel will discuss these and other important topics:

  • Definitions of CFCs and U.S. shareholders, reporting and tax obligations for U.S. taxpayers
  • Constructive ownership tests in CFCs and the downward attribution rules
  • How the proposed regulations and GILTI high-tax kick out effect planning
  • Treatment of earnings invested in U.S. property


Fuller, Pamela
Pamela A. Fuller, Esq.

Of Counsel (Tax, M&A, International)
Tully Rinckey

Ms. Fuller’s practice has a triple focus: tax planning, tax controversies, and tax compliance. She advises a wide...  |  Read More

McCormick, Patrick
Patrick J. McCormick, J.D., LL.M.

Culhane Meadows Haughian & Walsh

Mr. McCormick specializes in the areas of international taxation, tax compliance, and offshore reporting...  |  Read More

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