Preliminary highlights of the proposed Section 250 deduction regulations

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March 2019

Overview

Treasury released proposed regulations (the Proposed Regulations) under new Section 250 on March 4. The Proposed Regulations provide guidance regarding the deduction allowed under Section 250(a), which is equal to the sum of (i) 37.5% of a domestic corporation’s foreign-derived intangible income (FDII) and (ii) 50% of its global intangible low-taxed income (GILTI) plus Section 78 inclusions, with a limit (on the overall deduction amount) based on taxable income. The Proposed Regulations also provide rules for determining the amount of a domestic corporation’s FDII under Section 250(b), including guidance that defines and provides mechanics to calculate several key FDII components, including deduction eligible income (DEI), foreign-derived deduction eligible income (FDDEI), and deemed intangible income (DII). In addition, the Proposed Regulations amend a number of tax reporting requirements under Sections 6038, 6038A, and 6038C. Comments must be received by 60 days after the date of publication in the Federal Register.

The takeaway

The above-mentioned highlights are not an exhaustive list of the provisions in the Proposed Regulations. Please stay tuned for our in-depth Insight to be published in the coming days.

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Michael DiFronzo

Partner, Washington National Tax Services ITS Leader, PwC US

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