Page 200 - International Taxation IRS Training Guides

Base Erosion
and

Anti-Abuse Tax,
or BEAT

under IRC 59A, known as BEAT
 TCJA enacted a new tax

to a domestic corporation (1) that is part of a
 BEAT applies
group with at least $500 million of annual domestic
gross
receipts over
a three-year averaging period and (2) that has

a “base erosion percentage”
of 3% (2% for certain banks
dealers) or higher for the tax year
and securities

• Generally, the base erosion percentage is the percentage determined by

dividing the aggregate “base erosion tax benefits” for the taxable year by the

aggregate deductions for
the taxable year (including “base erosion tax
benefits”)

• Applies
also to a foreign corporation engaged in a US trade or business for
connected income tax liability
purposes of determining its effectively

• Not applicable to S corporations, RICs, or REITs

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