Last Friday, the IRS and Treasury issued final regulations on GILTI, further Proposed Regulations on GILTI, and Temporary Regulations on the dividend received deduction on dividend from foreign subsidiaries.
The final regulations clarify and finalize much of what was included in the original proposed regulations addressing many of the concerns that were raised in the comment letters to the IRS with adjustments where the IRS felt the comments were reasonable. The modifications overall were a mixed bag for taxpayers with some modifications that are taxpayer favorable while others were less favorable for the taxpayers.
The Good News:
The new proposed regulations on GILTI expands the ability of taxpayers to elect the high tax exception on certain income of a CFC that is subject to a high local country tax. These regulations also propose treating domestic partnerships as foreign partnerships for purposes of determining which partners would have inclusions under Subpart F and GILTI.
This guidance could not have come soon enough as taxpayers must rely on this guidance to file their 2018 tax returns which are due in less than three months’ time.
If you haven’t already, please fill out the form below to discuss how GILTI and this guidance will impact your bottom line.