Global Entity Structuring After OBBBA: New Considerations for U.S. Taxpayers Doing Business Abroad

U.S. taxpayers are increasingly engaging in activities abroad. The most obvious considerations are whether to form the entity in the U.S. or another country and what type of entity to choose. Adding to the complexity of the decision are the numerous types of relief available for taxing foreign income in the U.S.

The OBBBA has modified and renamed GILTI to net controlled foreign corporation tested income (NCTI) and eliminated the qualified business asset investment (QBAI) deduction that reduced the GILTI inclusion. FDII, too, has been modified and renamed, now referenced as FDDEI, or foreign-derived deduction eligible income. To ease taxation, formerly, Section 250 provided tax relief to domestic corporations with a 37.5% tax deduction for FDII and a 50% deduction for GILTI. The corresponding Section 250 deductions for NCTI and FDDEI will be 40% and 33.34% respectively. These changes, along with the reduction of the Section 960(d) rate for foreign tax credits from 20% to 10%, create effective tax rates of 12.6% for NCTI and approximately 14% for FDDEI. Weighing the taxation on worldwide income against the benefits and burdens of being a foreign entity is a complex process.

Holding the investment individually seems to be a good idea when coupled with the 962 election to take advantage of the lower corporate rates. However, individuals aren't eligible for Section 959 relief from the second level of taxation when assets are distributed.

Listen as our panel of experts explains U.S. taxation of foreign income and the impact of OBBBA, including GILTI/NCTI, Subpart F, and PFIC, and relief available by way of Section 962, foreign tax credits, and international treaties to help advisers make the best entity choice for businesses with earnings outside the U.S.

I. U.S. taxpayers defined

II. Foreign entities

A. Default classifications and electing out

B. Subpart F

C. PFICs

D. GILT/NCTI

III. Treaty provisions

IV. U.S. business entities

A. PTEs and C corporations

B. Section 959 relief from double taxation

V. Holding as individual

A. Sec 962 election to be taxed as corporation

B. Other considerations

VI. Foreign reporting requirements

The panel will review these and other critical issues:

• New considerations after the OBBBA for global entities
• When to elect to be taxed at the corporate rate under Section 962
• What treaty relief is available for double taxation
• When non-tax considerations outweigh tax benefits
• How foreign tax credits impact the choice of entity

Learning Objectives

After completing this course, you will be able to:

• Identify the U.S. default classifications for foreign entities
• Ascertain when an individual may want to make the election under 962
• Determine who is a U.S. taxpayer
• Decide what relief is available under international treaties

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite:

  Three years+ business or public firm experience preparing complex tax forms and schedules, supervising other preparers or accountants. Specific knowledge and understanding of international taxation including residency determination, foreign entity classifications, application of treaty benefits, as well as GILTI, Subpart F, and the related Section 250 deductions.

  
  

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