Treasury and the IRS on March 4 released proposed regulations under Section 250, added to the Code by the 2017 tax reform legislation. The proposed regulations provide guidance regarding the deduction allowed under Section 250(a), which is equal to the sum of (i) 37.5% of a domestic corporation’s foreign-derived intangible income (FDII) and (ii) 50% of its global intangible low-taxed income (GILTI) plus Section 78 inclusions, with a limit on the overall deduction amount based on taxable income.
The proposed regulations also define and provide mechanics to calculate several key FDII components, including deduction eligible income (DEI), foreign-derived deduction eligible income (FDDEI), and deemed intangible income (DII).
The proposed regulations raise a number of important issues. PwC on March 14 hosted a webcast featuring PwC specialists who discussed some of these issues. The Insight below highlights those discussions. Watch the webcast replay and register for future webcasts in PwC’s Tax Readiness series, which addresses other important current tax topics.