GILTI Tax

Similar to a subpart F inclusion, “U.S. Shareholders” of CFCs include GILTI in income on an annual basis. U.S. corporations may be entitled under section 250 to a deduction of up to 50% of their GILTI inclusion and related section 78 gross-up.

Unlike a subpart F inclusion, a U.S. Shareholder calculates a single GILTI inclusion, based on all of its CFCs.

In general, GILTI is the excess of a U.S. Shareholder’s “net tested income” (that is, the excess of the aggregate of its CFCs’ tested income over its CFCs’ tested losses), over its “net deemed tangible income return” (“net DTIR”), which is a deemed return on the CFCs’ tangible assets (10% of qualified business asset investment or “QBAI”) reduced by the CFCs’ “specified interest expense”).

Professional help is necessary when undertaking these tax filing processes.