Treasury and the IRS have released the unpublished version of the proposed regulations for the foreign-derived intangible income (FDII) and global intangible low-taxed income (GILTI) deduction under Section 250. Section 250 was enacted under the 2017 tax reform act and set forth a deduction for domestic corporations equal to the sum of 37.5% of their FDII and 50% of their GILTI and Section 78 amount, up to a limit based on taxable income. Section 250 also introduced rules for determining FDII. The proposed regulations expand on and clarify these rules.
Proposed regulations were also released under Sections 250, 962, and 1502. Further, proposed regulations under Sections 6038, and 6038A were released to facilitate administration of certain rules in the proposed regulations.
The regulations contain 85 pages of preamble language and 82 of regulatory text, including 38 examples. Public comments on the proposed regulations are due 60 days after publication in the Federal Register (i.e., 60 days after March 6, 2019). The proposed regulations contain effective dates that are tied to the date of publication in the Federal Register.
PwC will publish additional analysis of the proposed regulations in the near future.
Washington National Tax Services International Tax Leader, PwC US