Elizabeth Stevens Speaks to Bloomberg on GILTI and CFCs

09.02.2020
Bloomberg Law

Companies that opt out of a new foreign income tax regime will face a slew of hurdles that could prevent that income from coming back to the U.S. tax-free when it is paid out to U.S. shareholders.

. . .

“Now it’s just much easier to foot fault the rules because of the high-tax exclusion, and it’s not something they would fix in future rules, it’s just a trap for the unwary,” said Elizabeth Stevens, a member at Caplin & Drysdale in Washington.

. . .

Deciding to go for the high-tax exclusion or the dividends-received deduction could be even more challenging for companies that frequently engage in M&A activity. That’s because an incoming asset could dilute the benefit of the 245A deduction following an acquisition.

“If you have a group that is very acquisitive, you have to make sure to meet the requirements of 245A with respect to all of the CFCs effected by making the election,” Stevens said.

. . .

The potential double tax arising from that analysis can hit many more taxpayers on a much larger quantum of CFC earnings because the GILTI income subject to the high-tax exclusion is no longer narrow, Stevens said.

For the full article, please visit Bloomberg's website.

Attorneys

Related Practices/Industries

Jump to Page

We use cookies to make your experience of our website better. By continuing to browse this site you consent to the use of cookies. Please visit our Privacy Policy for more information.