Can an Item of Foreign Source Income be Double Taxed Under Both the Subpart F and GILTI Rules?
By Anthony Diosdi The 2017 Tax Cuts and Jobs Act or international tax reform introduced significant changes in the way the U.S. taxes cross-border transactions. In particular, international tax reform introduced the global intangible low-taxed income (“GILTI”) regime under Internal Revenue Code Section 951A. International tax reform also eliminated the Section 902 indirect foreign tax credit which previously allowed certain domestic corporations to deduct foreign income taxes paid by foreign subsidiaries. Perhaps the greatest impact of international tax reform is how Controlled Foreign Corporations (“CFCs”) calculate their taxable income. Under the Tax Cuts and Jobs Act require CFCs to calculate their foreign source taxable income under three related but separate tax regimes:1. The subpart F tax regime.2. The Section 951A GILTI rules.3. The Section 245A rules which allows for an…