GILTI High-Tax Exclusion: Sections 951A and 954 Rules for Individual and C Corporation Shareholders

The significant expansion of the application of Subpart F and the addition of an inclusion rule for CFC income--the GILTI rule under tax reform continues to cause complexities for taxpayers and their counsel.

GILTI is not limited to intangible or low-taxed income. It generally consists of a CFC's net income, less Subpart F income, a 10 percent return on depreciable tangible assets, and a few other exclusions. A U.S. person who is a shareholder owning at least 10 percent of a CFC is subject to U.S. federal income tax on a share of the CFC's GILTI under IRC Section 951A. Individuals can experience higher tax rates on GILTI compared to domestic C corporations.

Also, the IRS issued regulations to address the treatment of income subject to high foreign tax rates. The regulations highlight aspects of the GILTI high-tax exclusion and conform them with the Subpart F high-tax exception. They also provide for an election under Sec. 954(b)(4) for both Subpart F income and tested income.

Listen as our panel provides tax professionals with guidance on the challenges of the GILTI provisions under the new tax law. The panel will discuss GILTI and the Section 250 deduction--particularly for individual taxpayers--and provide tax planning tips to minimize the tax liability of taxpayers with CFC interests.

1. Overview of Section 951A
2. Prior treatment of CFC income and reporting requirements
3. C corporation vs. Individual taxpayers and the application of GILTI rules
4. GILTI high-tax exclusion
5. Methods to defer or reduce the impact of GILTI for individuals, trusts, and non-C corporation U.S. shareholders

The panel will review these and other relevant topics:

• Determining whether a taxpayer is subject to GILTI tax under Section 951A
• Calculating GILTI on CFC income
• GILTI high-tax exclusion
• Recognizing the reporting requirements and possible credits or deductions
• Tactics to defer or minimize the GILTI tax

Learning Objectives

After completing this course, you will be able to:

• Identify foreign holdings and income subject to GILTI
• Understand the differences between the prior treatment of CFC income and Section 951A
• Determine how to calculate tax on GILTI
• Ascertain methods to defer or reduce the GILTI tax
• Recognize the impact of recent IRS regulations for GILTI high-tax exclusion

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite: Three years+ business or professional experience at mid-level within the organization, preparing complex tax forms and schedules. Specific knowledge and understanding of international taxation, deferred foreign-source income, earnings and profits, controlled foreign corporations, specified foreign corporations, and repatriation of deferred foreign earnings; familiarity with accumulated cash and non-cash retained earnings and profits and netting of earnings and profits positions.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).