Global intangible low-taxed income (“GILTI”) is a new type of income inclusion under the Tax Cuts and Jobs Act. Under the new GILTI rules, a U.S. shareholder of a controlled foreign corporation (“CFC”) must include in gross income for a taxable year its GILTI income in a manner generally similar to inclusions of subpart F income. GILTI means, with respect to any U.S. shareholder for the shareholder’s taxable year, the excess (if any) of the shareholder’s net CFC tested income over the shareholder’s net deemed tangible income return (“DTIR”). The shareholder’s net DTIR is an amount equal to 10% of the aggregate of the shareholder’s pro rata share of the qualified business asset investment (“QBAI”) of each CFC with respect to which it is a U.S. shareholder. The formula for GILTI, which is calculated at the U.S. shareholder level, is:
GILTI income = net CFC tested income – (10% x QBAI)
Today we have published a video that discusses how the GILTI income rules will apply in the circumstance of a U.S. citizen that owns 100% of a foreign corporation. The video can be viewed at our Youtube channel.