IRS Working to Address Double-Gain-Recognition Issue in Final GILTI Regulations and Temporary Section 245A Regulations

Speaking at an event on September 4, John Merrick, senior-level counsel to the IRS associate chief counsel (international), stated that the IRS is aware that the interaction between the anti-avoidance rules of section 245A (the participation exemption deduction) and section 951A (global intangible low-taxed income, GILTI) could result in double gain recognition for taxpayers and is working to correct this issue. Specifically, there is concern that a deduction could be denied for purposes of calculating the GILTI tested income of a controlled foreign corporation under the disqualified basis rules in the final GILTI regulations and that a deduction under section 245A could also be denied for related income, when repatriated, by the extraordinary disposition rule under the temporary section 245A regulations.

Read more: IRS Trying to Coordinate GILTI and Participation Exemption Rules


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