Page 195 - International Taxation IRS Training Guides

Deduction for
FDII and GILTI (Cont'd)

 Purpose of FDII Deduction: To neutralize the effect of

providing a deduction with respect to GILTI earned by a

domestic
corporation through a CFC, TCJA also provides a

corresponding deduction for certain foreign-derived

income, known as foreign derived intangible income, or
FDII, earned directly
by the domestic corporation

FDII for 2018-2025, 21.875% of FDII starting in 2026
− 37.5% of

 Overall Purpose of IRC 250 Deduction: To neutralize the
role tax
considerations play in the location of income

attributable to foreign activity

 Effective for taxable years beginning after Dec. 31, 2017

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