Stephen C. Fox, CPA
U.S. International Tax
Stephen C. Fox, CPA, CMA
PO Box 880695
Port Saint Lucie,  FL  34988
+1(973) 610-5669

Summary of 2017 Tax Law Changes in December, 2017

Key international related changes:
- New 100% deduction for corporations receiving dividends from foreign subs, starting 2018.
- 2017 and/or 2018 tax year inclusion of all prior E&P of foreign subs in income of U.S. 10% shareholders. (Applies only to CFCs for U.S. individuals who are shareholders.) There's a corresponding deduction reducing the effective rate to about 8% or 15.5%. The additional tax can be paid in installments, and S corporations can defer it indefinitely, but ONLY IF elections and payments are made by the U.S. shareholder's or S corporation's return due date(s) without extensions.
- 50% deduction for corporations for export and foreign services net income. Note: DISC still remains effective, and between DISC and the deduction a C corp can save 2/3 of their export related income tax. Begins 2018
- New Subpart F inclusion, but with a deduction reducing the effective rate to about 10%, for low-taxed (19% or 33%) income of foreign subs in excess of 10% return on fixed assets. Begins 2018.
- Source rule changed for sales of produced inventory: now 100% to place of production activities. This can have a favorable effect or unfavorable effect beginning 2018.
- No more deemed paid FTC under §902. However the §960 deemed paid credit replaces it for Subpart F inclusions. Begins 2018.
- New Base Erosion Tax, a form of AMT, on US subs of large foreign corporations (and maybe some large US corporations), beginning 2018.
For an outline of a complete summary of the bill, click here
It's your business:  get personal.  Call Steve Fox at  1(973) 610-5669  or  email steve @ sfoxcpa .com
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