GILTI? IRS issues proposed regulations

Section 951A, which was added by the Tax Cuts and Jobs Act (TCJA) enacted in December, 2017, subjects a current US tax on a U.S. shareholder’s pro rata share of its global intangible low tax income (GILTI).

Under the TCJA, a U.S. person that owns at least 10 percent of the value or voting rights in one or more CFCs will be required to include its global intangible low-taxed income as currently taxable income, regardless of whether any amount is distributed to the shareholder. A U.S. person includes U.S. individuals, domestic corporations, partnerships, trusts and estates.

Per IRS news release 2018-186, the new reporting rules requires the filing of Form 8992. The Form would be helpful for U.S. Shareholder Calculation of Global Intangible Low-Taxed Income.

The new law applies to the first tax year of a CFC beginning after Dec. 31, 2017, and the U.S. shareholder’s year with or within which that year ends, and all subsequent tax years.

These proposed regulations do not include foreign tax credit computational rules relating to global intangible low-taxed income, which will be addressed separately in the future as the release further states.

CPA Global Tax team can help you navigate through to the maze of these complicated rules. Please email us for any assistance.

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Are you double dipping on your charitable contributions? IRS says no more!

The Arizona taxpayers (like taxpayers residing in many other states) have had the benefit of being able to make a charitable contribution to a qualified charity and take that amount not only as a tax credit against their Arizona taxes and get a dollar for dollar back on their tax return, but have also been able to take a federal tax deduction to save federal taxes. However, that could possibly change soon.
You can no longer double-dip, says the IRS!

On Thursday, August 23rd, the IRS issued proposed regulations that could affect your ability to utilize your state dollar-for-dollar tax credit as a federal deduction if you itemize.

Your State dollar-for-dollar tax credit contribution may need to be made by Monday, August 27, 2018 if you are planning to utilize it for a 2018 Federal deduction.

This is just a proposed regulation at this time but will be the final in all likelihood as IRS has been targeting the change for a long time. It states only tax credit contributions made after August 27, 2018 will be affected by these regulations.

To recap, Arizona has five principal tax credit opportunities:

* Public School donation
* Private School donation
* Donation to Military Family Relief Fund
* Donations to Qualifying Foster Care Charitable Organizations
* Donations to Qualifying Charitable Organizations

For those of you that aren’t familiar with all the different deduction opportunities for the Arizona credit, information can be found on Department of Revenue’s information regarding tax credits: https://azdor.gov/tax-credits.

As a reminder, contributions made to a charitable organization overseas are generally not deductible unless a tax treaty provides for the deduction.