Form 8992 — Global Intangible Low-Taxed Income (GILTI)
Complete practitioner guide to Form 8992 for 2026. GILTI inclusion calculation, §250 deduction, high-tax exclusion, and planning strategies. Free for licensed tax professionals.
Implementation Guide for Tax Professionals
Identify CFC Ownership
GILTI applies to U.S. shareholders who own 10%+ of a Controlled Foreign Corporation (CFC). A CFC is a foreign corporation where U.S. shareholders own more than 50% of the vote or value. Identify all CFCs owned directly or indirectly. Related party attribution rules apply — constructive ownership can create CFC status unexpectedly. [IRC §951A, §957]
Calculate Net Tested Income
Net tested income = CFC's gross tested income minus allocable deductions. Gross tested income is the CFC's gross income excluding: Subpart F income, ECI, high-taxed income (if HTE election made), dividends from related persons, and foreign oil and gas income. Tested losses from one CFC can offset tested income from another CFC.
Calculate QBAI and the GILTI Inclusion
QBAI (Qualified Business Asset Investment) = average of the CFC's adjusted basis in depreciable tangible property used in producing tested income. GILTI inclusion = net tested income minus 10% of QBAI. The 10% of QBAI represents the "routine return" exempt from GILTI. The remaining amount is the GILTI inclusion passed through to U.S. shareholders.
Apply the §250 Deduction (C-Corps Only)
C-Corps can deduct 50% of GILTI (37.5% after 2025 under current law), reducing the effective GILTI tax rate to 10.5%. The §250 deduction is NOT available to individuals or pass-through entities — they pay ordinary income rates on GILTI. Consider the §962 election for individuals to be taxed as a corporation on GILTI, gaining access to the §250 deduction and FTC.
Frequently Asked Questions
What is GILTI?
Global Intangible Low-Taxed Income (GILTI) is the income earned by Controlled Foreign Corporations (CFCs) above a 10% return on tangible assets (the "routine return"). GILTI is included in the gross income of U.S. shareholders of CFCs. The intent is to tax income attributable to intangible assets (patents, trademarks, software) that have been shifted to low-tax jurisdictions. [IRC §951A]
How is the GILTI inclusion calculated?
GILTI inclusion = CFC's net tested income - 10% of QBAI (Qualified Business Asset Investment). QBAI is the average of the CFC's adjusted basis in depreciable tangible property used in the production of tested income. The 10% of QBAI represents the "routine return" that is not subject to GILTI. The remaining income is the GILTI inclusion.
What is the §250 GILTI deduction?
C-Corps can deduct 50% of GILTI (reduced to 37.5% after 2025 under current law). This effectively reduces the GILTI tax rate to 10.5% (21% × 50%). The §250 deduction is not available to individuals or pass-through entities — they are taxed on GILTI at ordinary income rates (up to 37%). This creates a significant incentive for individuals with CFC ownership to consider C-Corp structures.
What is the GILTI high-tax exclusion?
The GILTI high-tax exclusion (HTE) allows taxpayers to exclude CFC income that was subject to a foreign effective tax rate of at least 90% of the U.S. corporate rate (18.9% for 2026). The HTE is an annual election made on Form 8992. The election applies to all CFCs — it cannot be made selectively for some CFCs. The HTE can significantly reduce GILTI for taxpayers with CFCs in high-tax jurisdictions.
How does GILTI affect individual CFC shareholders?
Individual U.S. shareholders of CFCs include GILTI in gross income at ordinary income rates (no §250 deduction). The FTC is available but limited. Strategies for individuals: (1) check-the-box election to treat the CFC as a branch (but this creates other issues); (2) consider holding CFC through a C-Corp; (3) use the GILTI HTE to exclude high-taxed income; (4) consider §962 election to be taxed as a corporation on GILTI.
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