United States: The New Foreign Tax Credit Proposed Regulations – An Executive Summary

Released on November 30, 2018, the foreign tax credit proposed regulations provide a comprehensive new framework for calculating the foreign tax credit in light of several changes made by the Tax Cuts and Jobs Act (TCJA or the Act). With respect to changes made by the TJCA, the new regulations are proposed to be effective generally for taxable years beginning after the enactment of TCJA.

The remaining rules are proposed to be effective generally for taxable years ending on or after December 4, 2018, the date the proposed regulations were published in the Federal Register. Thus, nearly the entire package, once finalized, can be expected to apply to 2018 for calendar year filers. U.S.-based companies will need to get up to speed very quickly on a whole host of new rules, including the following:

  • Expense allocations to GILTI and other § 904(d) baskets, including the very complex § 904(b)(4) allocation rule enacted in the TCJA
  • Basketing of Foreign Tax Credit carryovers arising from before the Act, and carrybacks from 2018 to the last year before the Act
  • Whether the § 904(d) "look-through rule" will continue to provide general basket treatment of intercompany royalties and interest payments
  • How income and taxes are allocated to the newly created foreign branch basket
  • Calculation of the indirect credit on CFC-level taxes with respect to subpart F income and GILTI now that multi-year pools have been repealed

In providing a comprehensive new framework for the post-TCJA foreign tax credit, the proposed regulations are important to U.S. multinational companies planning for the utilization of foreign tax credits in the new regime.

Expense Allocation

The proposed regulations make a number of conforming changes to the existing regulations on the allocation and apportionment of expenses, Treas. Reg. §§ 1.861-8 to 1.861-17.

Allocation of Expenses to GILTI

The proposed regulations provide much-anticipated guidance on the extent to which expenses must be allocated to GILTI basket income. Several commentators suggested that U.S. parent companies should not have to allocate any expenses to the GILTI basket. This would have allowed GILTI to operate as a worldwide minimum tax at 13.125%, as described in the TCJA committee reports.

Treasury and the IRS rejected these comments and generally apply the existing expense allocation rules to determine taxable income in the GILTI basket. However, the proposed regulations treat a U.S. corporation's GILTI gross income as exempt income subject to § 864(e)(3) to the extent it is reduced by the § 250 deduction, and they treat the GILTI portion of CFC stock as an exempt asset in the same proportion. In general, 50% of GILTI gross income and 50% of the GILTI portion of CFC stock are treated as exempt. In effect, the proposed regulations "split the baby" between full expense allocation and the 13.125% minimum tax approach noted above.

As such, the portion of GILTI sheltered by the § 250 deduction and the related assets are eliminated from both the numerator and the denominator of the § 861 expense apportionment fraction. This has the effect of reducing the portion of expenses that are allocated to the GILTI basket (though not by 50%). A similar adjustment is made to assets that generate FDII, generally resulting in a 37.5% reduction in FDII and FDII-producing assets for § 904 expense apportionment purposes.

Rules for Assigning CFC Stock to Multiple Baskets

The proposed regulations provide detailed rules for apportioning CFC stock to § 904(d) baskets when the stock generates income in more than one basket. These rules reflect the fact that the GILTI basket does not include any income at the CFC level. Thus, a CFC may generate general basket income that gives rise to GILTI basket income in the hands of the U.S. parent.

Under proposed § 1.861-13, CFC stock is first assigned to a basket under the existing rules, using either the asset method or the modified gross income method. Next, a portion of the stock that is initially characterized as producing gross tested income is assigned to the GILTI basket. Importantly, only the portion of the stock so characterized equal to the § 960(d)(2) "inclusion percentage" is assigned to the GILTI basket, since the rest of the CFC's gross tested income is offset at the U.S. shareholder level by other CFCs' tested losses and by the net deemed tangible income return (NDTIR). The remaining gross tested income is assigned to the general, passive or other applicable basket.

Special Allocation Rule When CFCs Have non-GILTI, non-Subpart F Income

The proposed regulations also implement § 904(b)(4), a new special rule added by the TCJA for apportioning expenses that are attributable to producing dividend income eligible for the dividends received deduction under § 245A. Under proposed § 1.861-13(a)(5), the portion of CFC stock assigned to the general, passive and U.S. source categories is subdivided between a § 245A subgroup and a non § 245A subgroup. CFC stock in a category is assigned to the § 245A subgroup to the extent the stock is initially characterized as producing gross tested income but is not assigned to the GILTI basket. This portion of the stock is not treated as an exempt asset.

Under proposed § 1.904(b)-3, a U.S. corporation's foreign source income in a separate basket and worldwide taxable income are then determined without regard to any deduction attributable to CFC stock in a § 245A subgroup. Similarly, in the case of expense allocations on the basis of income, separate basket foreign source income and worldwide taxable income are determined without regard to any dividend for which a § 245A DRD is allowed or any deductions allocated to gross income in the § 245A subgroup in that basket.

Because § 904(b)(4) and proposed § 1.904(b)-3 require adjustments to both the numerator and the denominator of the § 904(a) fraction, it is no longer possible to determine the FTC limitation in a separate category by simply multiplying the foreign source income in that category by the U.S. tax rate. Instead, each element of the § 904(a) formula must be determined separately in each § 904(d) basket. The regulations provide a detailed example to this effect. This example is summarized in the Appendix at the end of this article.

Other Changes to the Expense Allocation Rules

Existing regulations under § 1.861-17 address the allocation of research and experimental (R&E) expense to foreign source income. This expense is allocated generally using the worldwide sales of the taxpayer and its affiliates (the sales method), or upon the making a five-year binding election, the gross income of the taxpayer (the gross income method). The proposed regulations provide a one-time election, solely for the first TCJA taxable year, to change from the gross income method to the sales method before the five-year period has ended. Taxpayers that have recently adopted the gross income method should consider the election to go back to the sales method in light of the impact of the repeal of deferral and current inclusion of most CFC income on the U.S. tax return as GILTI.

The proposed regulations also contain rules addressing several expense allocation issues that are not unique to the TCJA. These include a new rule on the allocation of interest expense with respect to a loan made between a partnership and its U.S. corporate partner; revisions to the "debt-netting rules" of § 1.861-10 where the U.S. corporation lends to its CFC using hybrid debt; and clarifications to the rules for determining CFC stock basis for interest expense allocation, including the E&P adjustment. The proposed rules would clarify, for example, that the E&P taken into account in making the adjustment includes previously taxed income (PTI). As noted above, these new expense allocation rules are proposed to be effective for taxable years beginning after December 22, 2017, and/or taxable years ending on or after December 4, 2018. Thus, all of the rules can be expected to apply for calendar 2018.

More Guidance Forthcoming?

Finally, the preamble to the proposed regulations states that many of the existing expense allocation rules have not been significantly modified since 1988, and for taxable years beginning after December 31, 2020, groups will be able to elect worldwide interest expense apportionment under § 864(f). Therefore, Treasury and the IRS expect to reexamine the existing approaches to the expense allocation rules, including in particular the apportionment of interest, R&D, stewardship and G&A expenses, as well as the CFC netting rule in Treas. Reg. § 1.861-10. Treasury and the IRS request comments in this regard.

Rules on the New Foreign Branch Basket:

Definition of a "Foreign Branch"

The proposed regulations provide that foreign branch income means the gross income of a United States person (other than a pass-through entity) that is "attributable to" foreign branches held directly or indirectly through disregarded entities by the United States person. Foreign branch category income under the proposed regulations also includes a United States person's (other than a pass-through entity's) distributive share of partnership income that is attributable to a foreign branch held by the partnership. Therefore, partnerships are treated as aggregates for purposes of determining foreign branch income.

The proposed regulations define a foreign branch by reference to the §989 regulations by providing that a foreign branch is a QBU described in Treas. Reg. § 1.989(a)-1(b), with the added requirement that the QBU must carry on a trade or business outside the United States. In general, the activities of a corporation, partnership, trust, estate or individual qualify as a separate QBU if the activities constitute a trade or business, and a separate set of books and records is maintained with respect to the activities. Activities that constitute a permanent establishment in a foreign country are presumed to constitute a trade or business. Since the proposed regulations follow Section 989, rather than Section 987, a question arises whether a financing or holding company DRE constitutes a "foreign branch" for this purpose.

A foreign branch may consist of activities conducted through a partnership or trust that constitute a trade or business conducted outside the United States, but for which no separate set of books and records is maintained. An example illustrating this point provides that P, a domestic corporation, is a partner in PRS, a domestic partnership. PRS conducts activities constituting a trade or business solely in Country A (the Country A Business) whose income and expenses are reflected on the books and records of PRS's home office. PRS owns FDE1, a disregarded foreign entity organized in Country B. FDE1 conducts activities constituting a trade or business in Country B, whose income and expenses are reflected on a set of books and records separate from those of PRS. FDE1 owns FDE2, a disregarded foreign entity organized in Country C. FDE2 conducts activities constituting a trade or business in Country C, whose income and expenses are reflected on a set of books and records separate from those of PRS and FDE1.

The example concludes that even though PRS does not maintain a separate set of books and records with respect to the Country A business, the Country A business's activities are nevertheless treated as a QBU. Accordingly, the activities of the Country A business constitute a foreign branch, and PRS is the foreign branch owner. Further, the activities of the Country B and C businesses each constitute a foreign branch, and PRS is the foreign branch owner of each of the Country B and C businesses.

Attribution of Income to a Branch – General Rules

The proposed regulations generally look to a foreign branch's books and records in classifying foreign branch income. There are a number of exceptions to this rule, as follows:

  • Foreign branch income does not include items arising from activities carried out in the United States.
  • Foreign branch income does not include items of gross income arising from stock, including dividend income, income included under section 951(a)(1), 951A(a), or 1293(a) or gain from stock dispositions.
  • Foreign branch income does not include gain realized by a foreign branch owner on the disposition of an interest in a disregarded entity or an interest in a partnership or other pass-through entity, unless the gain is reflected on the books and records of a foreign branch and the interest is held in the ordinary course of the foreign branch owner's trade or business.

Thus, in contrast to the dual consolidated loss rules, gain or loss on sale of a disregarded entity is generally not "pushed down" to the branch basket. The proposed regulations provide, however, that a branch's sale of an interest in a disregarded entity engaged in the same line of business is considered to arise in the ordinary course of business.

The proposed regulations also contain anti-abuse rules reflecting a Treasury and IRS concern that in certain cases gross income items could be inappropriately recorded on the books and records of a foreign branch or a foreign branch owner. Accordingly, gross income is reattributed if a principal purpose of recording, or failing to record, an item on the books and records of a foreign branch is the avoidance of Federal income tax or avoiding the purposes of §904 or §250.

Treatment of Disregarded Transactions

Foreign branch income that is not passive must be adjusted to reflect certain transactions that are disregarded for Federal income tax purposes. This rule applies to transactions between a foreign branch and its foreign branch owner, as well as transactions between or among foreign branches, involving payments that would be deductible or capitalized if the payment were regarded for Federal income tax purposes. For example, a payment made by a foreign branch to its foreign branch owner may, to the extent allocable to non-passive income, result in a downward adjustment to foreign branch income and an increase in general category income. Each payment in a series of disregarded back-to-back payments—for example, a payment from one foreign branch to another foreign branch followed by a payment to the foreign branch owner—must be accounted for separately, resulting in potentially complex calculations to determine foreign branch income.

The proposed regulations provide a special rule where a foreign branch owner transfers IP to the branch. The amount of gross income attributable to the branch must be reduced, and general basket income must be increased, to reflect any payments for the IP that would have been required under § 482 or § 367(d) if the branch were a CFC.

Other New Rules Concerning the Section 904 Limitation

Section 78 Gross-Up on GILTI

As expected based on IRS commentary, the proposed regulations provide that the § 78 gross up for indirect foreign tax credits on GILTI is allocated to the GILTI basket for § 904 purposes. This rule avoids a potential whipsaw that would have resulted if the foreign tax credits were allocated to GILTI but the related § 78 gross-up were allocated to the general basket.

Basket Rules for Section 986(c) Currency Gain or Loss

The proposed regulations, § 1.904-4(p), provide that § 986(c) currency gain or loss with respect to a distribution of previously taxed earnings and profits (PTEP) is assigned to the same basket as the E&P from which the distribution is made. This is a very important rule, given the large amounts of PTEP CFCs have and will continue to have. Because CFC E&P cannot be in the GILTI basket, under the proposed rule, § 986(c) gain or loss also could not be in the GILTI basket. In most cases, § 986(c) gain or loss would be general or passive basket, and thus could increase or reduce the FTC limitations in those baskets.

Transition rules for FTC Carryovers and Carrybacks and Overall Foreign Loss and Similar Accounts

The proposed regulations, § 1.904-2(j), provide that if unused foreign taxes paid or accrued or deemed paid with respect to a separate category of income are carried forward to a taxable year beginning after December 31, 2017, those taxes generally are allocated to the same post-2017 separate category as the pre-2018 separate category from which the unused foreign taxes are carried. This is important since the Act itself did not provide any transition rules for assigning carryforwards of unused foreign taxes to a different basket, including the new GILTI and foreign branch baskets. Under the new rule, general basket FTC carryovers arising before the TCJA will ordinarily carry forward in the general basket.

The proposed regulations, however, allow taxpayers to elect to assign certain unused pre-2018 general basket taxes to the foreign branch basket to the extent the taxes would be attributable to the branch basket under the new rules. Unused general basket foreign taxes in the general category arising in those prior years are allocated and apportioned under § 1.904 6 between the general category and the foreign branch category. The taxpayer may make this election on either a timely filed original return or an amended return.

The proposed regulations provide that any unused foreign taxes with respect to the general basket or branch basket in a post-2017 taxable year that are carried back to a pre-2018 taxable year are allocated to the general basket. The proposed regulations also provide that any excess foreign taxes with respect to passive income or income in a specified separate basket (i.e., treaty resourced income) in a post-2017 taxable year that are carried back to a pre-2018 taxable year are allocated to the same pre-2018 separate category.

The proposed regulations provide similar transition rules for recapture in a post-2017 taxable year of an overall foreign loss (OFL), separate limitation loss (SLL) or overall domestic loss (ODL) arising in a year before the Act. Generally, OFL, ODL and SLL accounts are recaptured in the same separate category that would have resulted prior to TCJA.

(Partial) Retention of the Section 904(d) Look-Through Rules

Under the proposed regulations § 904(d)(3) look-through treatment applies solely for payments allocable to the passive category. Any other payments are assigned based on the general rules in § 1.904-4. Thus, the result ordinarily will be the same as under the existing regulations. Importantly, look-through payments that are allocated by a CFC against tested income remain in the general basket, and are not characterized as GILTI.

The proposed regulations treat GILTI inclusions in the same manner as subpart F inclusions under the look-through rules. Therefore, GILTI inclusions are treated as passive category income to the extent the amount included is attributable to passive tested income of the CFC. This rule will be rarely applied since most passive income is subpart F income and thus excluded from GILTI.

Other Guidance on the New Baskets of Income

In light of the new baskets for GILTI and branch income, the proposed regulations provide additional rules addressing the allocation of certain income to different baskets. Export financing interest and high-taxed income will be categorized under § 904 based on whether the income otherwise meets the definition of foreign branch, GILTI, or general basket income, based on the general rules in Reg. § 1.904-4.

The proposed regulations revise the grouping rules of the high-tax kick-out, § 1.904-4(c)(4), to group passive income from dividends, subpart F and GILTI inclusions from each foreign corporation, and passive income derived from each foreign QBU, under the grouping rules in §1.904-4(c)(3), rather than by reference to the source of the corporation's or QBU's income. Also, the proposed regulations further provide that any financial services income not treated as branch or GILTI basket income is treated as general basket income. § 1.904-4(e). This is an important clarification since the addition of the foreign branch and GILTI baskets take precedence over the pre-TCJA treatment of financial services income as general basket income.

Income Resourced by a Treaty

Proposed § 1.904-4(k) requires taxpayers to segregate income treated as foreign source under each treaty and then compute a separate foreign tax credit limitation for income in each separate category. The proposed regulations also provide that income resourced under treaties that are solely applicable to U.S. citizens who are residents of the other Contracting State is not subject to separate basket treatment. In addition, separate basket treatment applies to items of income resourced pursuant to a competent authority agreement.

The Base Differences Rule

The proposed regulations would modify the existing rules of § 1.904-6(a)(1)(iv) to provide that "base differences" arise only in limited circumstances, such as life insurance proceeds or gifts, which are excluded from income for Federal income tax purposes but are taxed as income under foreign law. In contrast, a computational difference attributable to differences in the amounts does not give rise to a base difference. These computational differences would be treated as timing differences. The proposed regulations clarify that taxes arising from a timing difference are assigned to the basket to which they would have been assigned if the income had been recognized in the year the tax was imposed.

In the limited circumstances where a base difference does exist, the proposed regulations state that the taxes are assigned to the "separate category described in Section 904(d)(2)(H)(i)." As commentators have noted, the TCJA did not update the cross-reference in the statutory base difference rule (Section 904(d)(2)(H)(i)) to refer to section § 904(d)(1)(D), the updated statutory location of the general basket. Rather, read literally, Section 904(d)(2)(H)(i) on its face now assigns such taxes to the branch basket, § 904(d)(1)(B). The proposed regulations do not explicitly address this issue. In any event, base differences are defined so narrowly under the proposed regulations that this issue will rarely arise.

Rules on the Indirect Credit under § 960

Section 78 Gross-Up as a "Dividend"

The existing regulations treat the § 78 gross-up as a "dividend" for various tax purposes. The proposed regulations modify this rule to provide that a § 78 gross-up is not, however, considered to be a "dividend" for purposes of § 245A. This change is immediately effective for CFCs and U.S. shareholders with a fiscal year, including for fiscal years beginning before and ending after December 31, 2017.

The Indirect Credit

With the repeal of § 902 and the old post-1986 pools of earnings and foreign income taxes, the indirect credit will now be calculated on a current-year basis. The proposed regulations provide much needed guidance on how to determine the foreign income taxes "attributable to" a GILTI or subpart F income inclusion. The main features of the new indirect credit calculation under the proposed regulations include the following:

  • Only "current year taxes" are eligible to be deemed paid. These are foreign income taxes accrued by the CFC in the current year or treated as so accrued under the relation-back doctrine.
  • Generally, current year taxes are allocated first to the existing Section 904 categories (general and passive) and then allocated among different income groups: (1) subpart F income; (2) tested income; and (3) the residual category. This allocation is done using the rules of § 1.904-6.
  • The subpart F income group is separated into categories consisting of each "item" of subpart F income described in § 1.954-1(c)(1)(iii). The foreign tax credit is calculated separately for each such group. For example, foreign base company sales income and foreign base company services income now constitute separate items of subpart F income for foreign tax credit purposes, notwithstanding that both items are in the general basket. This change could have a material impact on the application of the subpart F high-taxed exception, for example.
  • The tested income group consists of all tested income and taxes of the CFC, broken down by general basket tested income and (in unusual cases) passive basket tested income.
  • Any taxes that are not allocated to the subpart F income or tested income groups default to a "residual group." This could include income that meets an exception from tested income and subpart F income, such as the high-taxed exception. No indirect credits can be claimed at any time for taxes assigned to the residual group. See § 1.960-1(e).
  • Taxes imposed on CFC income as to which there is a "base difference" under § 1.904-6 are assigned to the residual group, and thus, are not creditable.

Under proposed § 1.960-2, the indirect credit with respect to a subpart F income group is generally equal to the same proportion of the current year taxes within that group as the portion of the subpart F income in that group which gives rise to an inclusion to the shareholder. The current E&P limitation reduces both the numerator and denominator of the inclusion fraction.

The indirect credit for the tested income / GILTI group under § 960(d) is generally the proportionate share of the CFCs' taxes in the tested income group equal to tested income times the shareholder's inclusion percentage.

The proposed regulations would provide that no foreign income taxes are creditable under § 960(a) with respect to an amount included under § 956 of the Code. Together with the proposed regulations released on October 31, 2018, suspending the operation of § 956 for most U.S. multinational corporations, this change would prevent taxpayers from using § 956 to access high-taxed foreign earnings.

The High-Taxed Exception

The high-taxed exception regulation (§ 1.954-1(d)) generally remains the same. However, as noted above, the changes to the indirect credit under § 960 will affect the high-taxed exception. Under the new regime, the high-taxed exception would only take into account current-year taxes. Also, in contrast to prior law, where all subpart F income in the general basket was combined into a single item of income, the new proposed regulations require the high-taxed exception to apply separately to each type of general or passive basket income.

A limited change was made to the high-taxed exception to address cases where foreign income taxes imposed on the CFC are "reasonably certain" to be refunded as a result of a distribution to the CFC's shareholders. In such cases, the relevant taxes are disregarded for purposes of the high-taxed exception. It can be expected this change will rarely apply.

Section 960(b) Taxes on Distributions of PTI

The proposed regulations also provide guidance on the creditability of withholding taxes and CFC-level taxes associated with distribution of PTI up to the US shareholder. Given the large amounts of PTI that will now be in the system, Section 960(b) credits are important.

For purposes of the § 960(b) credit, the proposed regulations require the shareholder to maintain for each CFC, up to 10 annual accounts of previously taxed earnings and profits and related foreign income taxes (PTEP Groups). (Whereas before § 959(c)(1) and (c)(2) E&P was referred to as "PTI," the proposed regulations seem to favor the "PTEP" acronym.) The 10 accounts relate to the different types of § 959(c)(1) and (c)(2) PTI (or PTEP) attributable to different inclusions, such as under Subpart F, § 965, GILTI and § 956. PTI in one PTEP Group may be reclassified as PTI in another PTEP Group as a result of a § 956 investment.

The proposed regulations require each PTEP Group and related foreign income taxes be maintained in annual layers. As PTI is distributed up the chain and withholding taxes are incurred, the E&P remains in the same PTEP Group and annual layer in the hands of the recipient as it was in the hands of the distributing corporation. For example, if during 2020, CFC1 makes a distribution of 2018-year PTI to CFC2, the PTI and any taxes will be assigned to CFC2's 2018 PTEP Account layer. The proposed regulations provide an example of this mechanism, § 1.960-3(e), Example 2.

The preamble to the proposed regulations states that the PTEP Groups and annual layers may be simplified if forthcoming § 959 regulations or that guidance may dispense with the requirement of maintaining annual layers in favor of pooling.


The following example from the proposed regulations illustrates the complex new calculation required to characterize assets as partially exempt and non-exempt in light of new § 250 of the Code:

Example: USP owns assets with a basis of 1,000 that generate U.S. source income, including 200 of assets that generate FDII. USP also owns CFC with a stock basis of 1,000 (after the E&P adjustment under § 864(e)(4)). CFC earns GILTI tested income of 100, which has not been subject to foreign tax. USP's other CFCs generate tested losses of 30, and USP's NDTIR is 10. Thus, USP's GILTI inclusion is 60, and the GILTI portion of its § 250 deduction is 30. All of CFC's income is general basket. USP's stock basis in each of its other CFCs is zero. USP's U.S. source income (before deducting interest expense) is 150. USP has a 50-interest expense deduction that must be apportioned.

Analysis: USP's U.S. assets include 200 that generate FDII, resulting in a 37.5% deduction under § 250. Thus, 37.5% of 200, or 75 of USP's U.S. assets are treated as exempt. All of CFC's stock is initially assigned to the general basket gross tested income category. USP's inclusion percentage is 60%, and so 600 of the 1,000 CFC stock value is assigned to the GILTI basket. Of that 600, 50%, or 300 is treated as an exempt asset. The remaining 400 of the CFC stock is assigned to the general basket and to the § 245A subgroup within the general basket. This 400 portion is not an exempt asset.

For purposes of apportioning USP's 50 interest deduction, USP's exempt assets are eliminated from both the numerator and the denominator of the apportionment fraction. USP's remaining assets are 925 of U.S. assets, 300 of CFC stock assigned to the GILTI basket, and 400 of CFC stock assigned to the general basket and the § 245A subgroup within the general basket. Expenses must be apportioned initially to the CFC stock in the § 245A subgroup, along with USP's other non-exempt assets.

As a result, USP's interest expense deduction of 50 is apportioned as follows: 24.62% (400 / 1,625), or 12.31 to the general basket, § 245A subgroup; 18.46% (300 / 1,625), or 9.23 to the GILTI basket; and 56.92% (925 / 1,625), or 28.46 to U.S. source income.

USP's FTC limitations in the general and GILTI baskets can now be determined. USP's pre-credit U.S. tax liability is 27.30 (taxable income of 130, multiplied by 21%). USP has no gross income in the general basket, and a deduction of 12.31 of interest expense. However, USP's general basket taxable income and worldwide taxable income are determined without regard to this interest expense deduction. USP's general basket FTC limitation is therefore zero (equal to 27.30 x 0 / 142.31) since USP has no gross income in the general basket.

USP has 60 of gross income in the GILTI basket, a deduction of 30 under § 250, and a deduction of 9.23 of interest expense. USP's GILTI basket taxable income is therefore 20.77. USP's worldwide taxable income is again determined without regard to its 12.31 interest deduction apportioned to the general basket, § 245A subgroup. USP's GILTI basket FTC limitation is therefore 3.98 (27.30 x 20.77 / 142.31).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions