Strategizing International Tax Best Practices – by Keith Brockman

Archive for the ‘IRS’ Category

Sec 163(j): Proposed & Final Regs

Proposed and Final Regulations were issued addressing Section 163(j) interest.

Links are attached for reference

td_9905_reg_106089_18

nprm_reg_107911_18td_9905_reg_106089_18

GILTI/Subpart F Regs: All or Nothing

Pursuant to Final and Proposed Regulations recently published, the high-tax exception would be a “unitary” election for both GILTI and Subpart F.

The election is made annually, and can apply retroactively to post-TCJA years.

In summary, Treasury has adopted some taxpayer comments favorably, while delivering an unexpected result in their guidance.

EY’s Alert provides additional background, with links to the Regulations.

https://www.ey.com/en_gl/tax-alerts/us-final-and-proposed-gilti-regulations-deliver-few-benefits-and-more-than-a-few-surprises

US FDII Final Regs

The Final Reg’s for Section 250, used in FDII and GILTI calculations, have been finalized.  These Reg’s are now undergoing analyses in trying to understand the complexities and nuances.  Some highlights include:

  • The Final Reg’s are effective for tax years beginning on or after 1/1/2021, although they can be applied retroactively in their entirety
  • General relaxation of the FDII documentation requirements
  • Formal ordering rules for interaction with other Code sections are reserved in the Final Reg’s
  • Final Reg’s require deductions to be apportioned to gross DEI and gross FDDEI without regard to the limitations in Sections 163(j), 170(b)(2), 246(b) and 250k, that may cause a mismatch in the deductions allowable for taxable income
  • Final Reg’s apply the exclusive geographic apportionment rule of Treas. Reg. Section 1.861-17(b) for purposes of apportioning R&E expenses to gross DEI and gross FDDEI

The Final Reg’s provided additional clarity, although a taxpayer will have to consider  if the Proposed Reg’s or Final Reg’s will be favorable for tax years prior to 2021.

EY’s Tax Alert provides additional details, as referenced.

https://www.ey.com/en_gl/tax-alerts/us-final-fdii-regulations-retain-proposed-regulations-structure-but-reduce-documentation-burden-defer-effective-date-and-make-important-substantive-changes-to-the-computation-of-section-250-deduction

US Regs: BEAT overview

KPMG’s initial observations of the final and proposed BEAT regulations are attached for reference:

Click to access 19569.pdf

US FTC Regs: Overview

KPMG has provided a quick turnaround on the final and proposed Foreign Tax Credit regulations, linked for reference.

Click to access tnf-ftc-initial-impressions-dec3-2019.pdf

 

US BEAT/FTC Reg’s

Final and proposed Regulations were issued with respect to the Foreign Tax Credit and BEAT.  Noting this regulation package collectively amounts to over 650 pages, it will require time and attention to webcasts, etc. to fully understand the breadth of these rules, especially as they may pertain to 2018 and/or 2019.

Click to access td-9882.pdf

Click to access reg-105495-19.pdf

Click to access 2019-25744.pdf

Click to access 2019-25745.pdf

%d bloggers like this: