Worldwide Tax Daily Quotes Clark Armitage: Exempts Score Win with GILTI Unrelated Business Income Exclusion

Tax Notes

The IRS is paying heed to commentators' calls for an exclusion of global intangible low-taxed income from the calculation of exempt organizations' unrelated business taxable income.

. . .

J. Clark Armitage of Caplin & Drysdale said the similar treatment of GILTI to subpart F income for UBTI was broadly anticipated.

It would be so difficult to distinguish what’s clearly an intent to have these two things treated in a like manner, Armitage said. They had to come up with a reason to treat them differently, and I can’t think of any ready answer. Both of them involve income that's currently included that’s earned by a controlled foreign corporation . There’s nothing different about the quality of the income or the nature of the relationship of the exempt organization to that income.

For support, Armitage also cited ST>to<ST statutory language in section 951A that would treat GILTI in the same manner as subpart F. While that statute lists many different statutory provisions for which that treatment is appropriate, section 512 is not specifically enumerated there.

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This little nuance is important in reflecting the broader view of the drafters here of this notice that unless Congress gave them really specific direction to treat GILTI income differently from subpart F income, they’re not going to do it, Armitage said.

For the full article, please visit Tax Notes’ website (subscription required). See also Meghan Biss’ related quote in the article “Guidance on UBTI Allocations Allows ‘Good Faith' Interpretations” by Fred Stokeld for Tax Notes.

Excerpt taken from the article “Exempts Score Win with GILTI Unrelated Business Income Exclusion” by Andrew Velarde for Tax Notes.


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