Impact of Basis Adjustment for Sale of Lower-Tier CFC Stock on Upper-Tier GILTI and Subpart F

ABA Tax Times May 2020

6 Pages Posted: 29 Jun 2020

Date Written: May 31, 2020

Abstract

This article deals with one of the many unanswered questions of the 2017 tax legislation — the potential impact of a basis adjustment on sale of a lower-tier controlled foreign corporation’s (CFC’s) stock for an upper-tier CFC’s global intangible low-taxed income (GILTI) and Subpart F calculations. The question, a classic exercise in statutory interpretation, revolves around a seemingly incommensurable overlap between the existing rules and the newly enacted statutory language. The implications are far reaching — from fundamentally altering the tax structuring of multinational enterprises to providing a vital precedent to statutory and regulatory interpretation.

© Charles Edward Andrew Lincoln IV

Note: “This is an article published by the American Bar Association Section of Taxation in ABA Tax Times in the Summer 2020 issue.”

Keywords: international tax, TCJA, GILTI, subpart F, CFC, basis adjustments

Suggested Citation

Lincoln IV, Charles Edward Andrew, Impact of Basis Adjustment for Sale of Lower-Tier CFC Stock on Upper-Tier GILTI and Subpart F (May 31, 2020). ABA Tax Times May 2020, Available at SSRN: https://ssrn.com/abstract=3618690

Charles Edward Andrew Lincoln IV (Contact Author)

University of Groningen, Faculty of Law ( email )

Groningen
Netherlands

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