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Planning Opportunities to Minimize Tax Impact of GILTI

Intro reading

We’ve written a bevy of articles on the impact of tax reform on owners of non-US corporations. Here are a few articles that will provide context for the below. Please peruse our site for more information, as well.

1. Transition Tax is not the same thing as GILTI Tax

2. Revised Form 5471; 2017 Tax Reform Impact on Tax Compliance Continues

3. Tax Reform for individuals with foreign corporations – Extended effect of Sec 962 Election

Controlled Foreign Corporation to Partnership or Disregarded Entity

One option is to change a foreign corporation’s status from a Controlled Foreign Corporation (CFC) to a foreign partnership or foreign disregarded entity, thus no longer subject to GILTI.  To process this change, an election is completed on Form 8832 and generally must be made no later than 75 days after the date from which the election requested to be effective.

As a result, all income from the foreign entity will flow through to the owner(s), and therefore could be subject to US taxation each year, but taxes paid or accrued will become eligible for credit (such credit is unavailable to individuals under GILTI).

Whole Story at TFX.

From → TFX Articles