IRS Issues Proposed Regulations on Deduction for Foreign-Derived Intangible Income and Global Intangible low-taxed income

The Internal Revenue Service issued proposed regulations under section 250 of the Internal Revenue Code, which offers domestic corporations deductions for foreign-derived intangible income (FDII) and global intangible low-taxed income. Section 250, as well as section 951A dealing with global intangible low-taxed income, was added by the 2017 Tax Cuts and Jobs Act (TCJA).

These proposed regulations provide guidance on both the computation of the deductions available under section 250 and determination of FDII. In addition, the proposed regulations provide rules for the computation of FDII in the consolidated return context. Proposed guidance on the computation of global intangible low-taxed income was published in the Federal Register on Oct. 10, 2018.

New reporting rules requiring the filing of Form 8993, Section 250 Deduction for Foreign-Derived Intangible Income and Global Intangible Low-Taxed Income, are also described in the proposed regulations.

Importantly, These Newly Released Regulations Confirm That an Individual or Trust That Has Made a 962 Election Is Allowed to Take the 250 Deduction Resulting in an Effective 10.5% Rate.

Treasury and IRS welcome public comments on these proposed regulations. For details on submitting comments, see the proposed regulations.

 

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