Changes in U.S. Tax Reporting for Multinationals – Just in Time Insights into New IRS Forms

As taxpayers near the end of income tax provision and tax return extension calculations, they may be thinking they have reached the end of the learning curve in terms of the impact of the Tax Cuts and Jobs Act (TCJA). While tax departments were busy developing new data sets and finding tools to assist with the calculations, the Internal Revenue Service (IRS) was releasing new draft and revised forms. Taxpayers will be required to familiarize themselves with these forms to report the TCJA effects in the coming months.

To aid alleviating this ever-expanding burden, A&M’s Tax has delved into the forms identifying key changes and discovering some notable surprises along the way. This article focuses on the new forms to report Global Intangible Low Taxed Income (GILTI), the Section 250 Deduction for GILTI and Foreign Derived Intangible Income (FDII), the Base Erosion and Anti-Abuse Tax (BEAT) and the transition tax under IRC section 965 (aka “the toll-charge”). A&M’s insights on changes to Form 5471 (Information Reporting for Controlled Foreign Corporations (CFCs)) and Form 1118 – (Foreign Tax Credit – Corporations) will be published in the coming weeks.

Taxpayers will attach all forms discussed below, if applicable, to their income tax returns and file by the due date for that return (including any extensions), meaning taxpayers may be getting close to turning their focus away from the calculations to reporting the results of all the hard work they have done thus far.

New Forms

Form 8992 – U.S. Shareholder Calculation of GILTI

As a refresher, GILTI is a U.S. shareholder-level tax on the earnings of its non-U.S. subsidiaries. U.S. shareholders report this inclusion on Form 8992 using inputs from the Form 5471 Schedule I-1s for each CFC it owns. The U.S. Shareholder reflects these inputs within Schedule A of Form 8992 to show tested income or loss, qualified business asset investment (QBAI), and specified interest expense by CFCs. The U.S. shareholder then reports the aggregate of its pro rata share of each of these inputs on the face of the form. Specifically, the required reporting is as follows:

• Part I – Net CFC Tested Income – Report the aggregate of net tested income and net tested loss from each CFC shown in Schedule A.
• Part II – Calculation of GILTI – Using inputs from Part I as well as the aggregate QBAI and specified interest expense amounts, show the GILTI inclusion which the U.S. shareholder filing this form ultimately includes within its taxable income.

One requirement…

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