The IRS recently issued Rev. Proc. 2021-26, which provides automatic consent for certain accounting method changes to the alternative depreciation system (ADS) for purposes of the global intangible low-taxed income (GILTI) regime under Section 951A, and updates terms and conditions for accounting method changes to take into account the enactment of Section 951A. Taxpayers subject to the GILTI regime may want to consider whether a change to the ADS for GILTI purposes may be necessary or beneficial.
Rev. Proc. 2021-26 clarifies the treatment of Section 481(a) adjustments for tested income/loss purposes for CFC method changes, which previously had been an area of uncertainty. CFCs should consider filing method changes to the ADS for computing income or E&P if necessary or beneficial, and should review the procedures to determine if they are eligible for audit protection when filing any method change for depreciation or other material items.
