• Navigating QBAI Quirks of the GILTI Regulations
  • November 7, 2018 | Authors: Jonathan S. Brenner; Josiah Child; J. Clark Armitage
  • Law Firms: Caplin & Drysdale, Chartered - New York Office; Caplin & Drysdale, Chartered - Washington Office
  • Yes, the proposed GILTI regulations didn’t answer some of the tough questions, particularly those surrounding the calculation of foreign tax credits.1 But the regulations do address other critical issues and suggests the general approach of Treasury and the Internal Revenue Service to drafting regulations under the 2017 tax act (‘‘Act’’).2 That approach is to adopt regulations that Treasury and the IRS believe are consistent with the overall statutory framework, and not regulations that unduly defer to specific statutory language that seems out of sync. As additional proposed regulations are issued (the anticipated release schedule is outlined near the end of this report), this approach undoubtedly will help taxpayers in some ways and hurt them in others. The statute and its legislative history produce a stark need for guidance, and where that guidance is adverse to taxpayers, there may be little room to challenge regulations as ultra vires. Most taxpayers will need to engage in self-help through structural solutions.