IRS Form 8992 “U.S. Shareholder Calculation of Global Intangible Low-Taxed Income (GILTI)” is the tax form used by U.S. shareholders of controlled foreign corporations to calculate and report their GILTI inclusion.
GILTI is a provision of the Tax Cuts and Jobs Act (TCJA) designed to tax the offshore intangible income of foreign corporations. Form 8992 calculates the shareholder’s GILTI inclusion amount, determines the allowable deduction and figures the resulting U.S. tax liability. It’s a key component of the U.S. international tax regime for multinationals and individuals with foreign corporate investments.
You must file Form 8992 if you are a U.S. Shareholder of one or more Controlled Foreign Corporations (CFCs) at any time during the tax year. A U.S. Shareholder is defined as a U.S. person that owns, directly, indirectly, or constructively, 10% or more of the total voting power or value of a foreign corporation.
- Controlled Foreign Corporation (CFC): A foreign corporation where U.S. shareholders (each owning 10% or more) collectively own more than 50% of the total voting power or value on any day during the tax year.
- GILTI Inclusion: The U.S. shareholder must include its share of the CFC’s GILTI in its gross income, regardless of whether any dividends are paid.
Form 8992 Filing Deadline and Extensions
- Deadline: Form 8992 must be filed by the due date (including extensions) of the U.S. shareholder’s income tax return.
- For individuals, this is typically April 15.
- For C corporations, this is the 15th day of the 4th month following the close of the tax year (e.g., April 15 for calendar-year taxpayers).
- An automatic extension to file the taxpayer’s income tax return (e.g., Form 4868 for individuals, Form 7004 for corporations) also extends the deadline to file Form 8992.
Failure to file a complete and accurate Form 8992 can trigger severe penalties:
- Failure-to-File Penalty: $10,000 for each CFC, with an additional $10,000 for each month the failure continues after 90 days from an IRS notice, capped at $50,000 per CFC.
- Accuracy-Related Penalty: A 20% penalty on any underpayment of tax attributable to negligence, disregard of rules, or substantial understatement of income.
Guide: How Do You Complete Form 8992?
Form 8992 is highly technical. Here’s a breakdown of its major sections:
Part I: U.S. Shareholder and CFC Information
This section identifies the U.S. shareholder and lists each CFC for which a GILTI calculation is required. It also requires reporting the shareholder’s pro rata share of the CFC’s Tested Income, Tested Loss, Qualified Business Asset Investment (QBAI), and Net Deemed Tangible Income Return (NDTIR).
Part II: Calculation of Global Intangible Low-Taxed Income (GILTI)
This is the core calculation. It aggregates figures from all CFCs.
- Line 1: Net CFC Tested Income. This is the total Tested Income from all CFCs, minus the total Tested Loss from all CFCs.
- Line 2: Net Deemed Tangible Income Return (NDTIR). This is a notional return on tangible assets, calculated as 10% of the aggregate QBAI (the average of the CFCs’ adjusted bases in tangible property used in a trade or business).
- Line 3: GILTI Inclusion Amount. This is the excess of Net CFC Tested Income (Line 1) over the NDTIR (Line 2). If the NDTIR is greater, GILTI is zero. The U.S. shareholder includes this amount in gross income.
Part III: Calculation of Deduction Eligible for Section 250
U.S. corporations and, in some cases, individuals can claim a deduction to partially offset the GILTI inclusion.
- For C corporations, the deduction is generally 50% of the GILTI inclusion, plus an additional 37.5% of Foreign-Derived Intangible Income (FDII), subject to a taxable income limitation.
- For individuals and other non-corporate shareholders, the deduction is limited to 37.5% of the GILTI inclusion (for tax years beginning after 2025, the corporate deduction drops to 37.5% and the individual deduction to 21.875%).
Part IV: Calculation of GILTI Foreign Tax Credit
This section calculates the allowable foreign tax credit (FTC) for taxes paid on the GILTI inclusion, known as the GILTI FTC.
- Key Limitation: The GILTI FTC is calculated on a global aggregate basis (not per country) and is limited to 80% of the foreign taxes attributable to GILTI income. Furthermore, it is subject to a separate “Section 904(d) basket,” meaning it cannot be cross-credited against other types of foreign income (like passive income).
Part V: CFC-by-CFC Information
This section requires detailed information for each CFC, including:
- Tested Income or Tested Loss.
- QBAI.
- Interest expense.
- Foreign taxes paid.
Common Mistakes to Avoid with Form 8992
- Incorrectly Identifying a CFC: Failing to apply the complex ownership attribution rules (constructive ownership) can lead to missing a CFC filing requirement.
- Miscomputing QBAI: Incorrectly calculating the average adjusted basis of tangible property or including ineligible property distorts the NDTIR and the GILTI calculation.
- Mishandling Tested Losses: Netting tested losses against tested income at the CFC level before aggregation is a common error. Losses must be aggregated separately at the shareholder level.
- Overlooking the GILTI FTC Limitations: Assuming a full credit for foreign taxes paid on GILTI income. The 80% limitation and separate basket rules often result in residual U.S. tax.
- For Individuals: Misapplying the Section 250 Deduction: Individual shareholders must calculate their GILTI through a domestic C corporation (by making a Section 962 election) to qualify for the more favorable 50% GILTI deduction available to corporations.
FAQs
I am an individual with a 100% owned foreign corporation. Do I file Form 8992?
Yes, if your foreign company meets the CFC definition. As a U.S. Shareholder, you must calculate your GILTI inclusion on Form 8992 and include it on your Form 1040.
What is the difference between GILTI and Subpart F income?
Both tax U.S. shareholders on CFC income currently. Subpart F targets specific, easily movable passive and base-eroding income. GILTI is a broader catch-all for a CFC’s residual income exceeding a 10% return on tangible assets. A CFC can have both Subpart F income and GILTI.
My CFC pays high foreign tax. Will I still owe U.S. tax on GILTI?
Likely yes, due to the GILTI foreign tax credit rules. The credit is limited to 80% of the foreign taxes in the GILTI basket. This often creates a “top-up” U.S. tax, especially in jurisdictions with tax rates below 13.125% (the effective U.S. rate after the 50% deduction for corporations).
Do I need to file Form 5471 if I file Form 8992?
Absolutely. Yes. Form 8992 does not replace Form 5471. Form 5471 (“Information Return of U.S. Persons With Respect To Certain Foreign Corporations”) is the primary information return for CFCs and must be filed to provide the detailed financial data needed to complete Form 8992.
Can GILTI be negative?
No. The GILTI inclusion amount itself cannot be less than zero. If total tested losses exceed tested income (Line 1 is negative), the GILTI inclusion is zero. However, tested losses are carried forward to offset tested income in future years.
Form 8992 represents one of the most complex calculations in international tax, intertwining concepts of tested income, tangible asset returns, and layered foreign tax credit limitations. Accurate completion requires a deep understanding of both the form’s mechanics and the underlying financial data from Form 5471. Given the high stakes and penalty risks, U.S. shareholders of CFCs are strongly advised to work with a tax professional who specializes in international corporate taxation to ensure compliance and optimize their global tax position.
