Treasury and the IRS recently released final regulations (the Final Regulations) addressing the deduction for Foreign-Derived Intangible Income (FDII) and Global Intangible Low-Taxed Income (collectively, the Section 250 deduction) as enacted by the 2017 tax reform act (the Act). Section 250 generally allows taxpayers to claim a deduction with respect to deemed intangible income earned from servicing foreign markets directly from the United States or through controlled foreign corporations (CFCs). This Tax Insight focuses on specific insurance issues associated with the Final Regulations.
The Final Regulations include several developments that may be relevant for insurance businesses, including the application of the taxable income limitations in Sections 163(j), 172, and 250; the acknowledgement of the issues faced by life-nonlife consolidated groups in applying the single-entity approach; and the continued exclusion of financial services income. Below are a few actions these businesses may want to consider:
Insurance Tax Leader, PwC US