Learn if your domestic C corporation can reap the benefits of a lower tax rate with the new deduction for Foreign-Derived Intangible Income. Get critical details from Erasmo S. Bruno Principal, LL.M., JD, CPA.
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If you are a domestic C corporation that has foreign source income, then you have the potential opportunity to utilize a much lower rate than the 21% corporate rate. Instead, your income can be taxed at 13.125% if it qualifies as FDII.
FDII is an acronym for foreign-derived intangible income. You would qualify for FDII if: A) you have foreign source income, B) you have to look at the depreciable assets. If your profit margin is in excess of 10% of your depreciable assets, then that difference, that extra amount of profit would be eligible to be foreign source. In particular, foreign-derived income would have to be from the sale of goods that are being used overseas or the provision of services that are being used overseas or possibly the licensing of intellectual property resulting in royalties.
Each taxpayer situation is different. This is the ideal time to meet with your Friedman tax advisor to evaluate and assess your particular situation and how the FDII can be utilized to benefit you.
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