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Who’s Got the B.E.A.T.? A Playbook for Determining Applicable Taxpayers and Payments

Volume 6 No 2    /    Read Article

By Rusudan Shervashidze and Stanley C. Ruchelman

Code §59A imposes tax on U.S. corporations with substantial gross receipts when base erosion payments to related entities significantly reduce regular corporate income tax. The new tax is known as the base erosion and anti-abuse tax (B.E.A.T.). In late December 2019, the I.R.S. proposed regulations that provide guidance for affected taxpayers. The proposed regulations provide a playbook for making required computations including

  • the gross receipts test to determine if the taxpayer meets the $500 million gross receipts requirement,
  • the base erosion percentage test,
  • how to apply the tests when a taxpayer is member of an Aggregate Group having members with differing year-ends,
  • various computations to determine whether a non-cash transaction is considered to be a payment to a related party outside the U.S. or is outside the scope of the B.E.A.T., and
  • other exceptions from the B.E.A.T.

In the first article of a multi-part series, Rusudan Shervashidze and Stanley C. Ruchelman detail each of these plays.  See more →