During this webinar, McDermott’s Tax team discussed the significant changes the One Big Beautiful Bill Act introduces for multinational corporations. The session explored key updates to global intangible low-taxed income (GILTI), foreign-derived intangible income (FDII), the base erosion and anti-abuse tax (BEAT), Section 163(j), bonus depreciation, Section 174, and more.

Top takeaways included:

1. Research and Experimental (R&E) deductibility offers strategic flexibility. The act reinstates immediate deductibility for US R&E expenditures, retroactive to the beginning of 2025. Taxpayers now have the flexibility to deduct expenses in full, amortize certain expenses over five years from when benefits are realized, or opt for a 10 – year schedule under Section 59(e). This choice allows companies to better align tax treatment with financial planning and manage implications under other tax rules.
2. GILTI and FDII overhaul creates favorable and unfavorable impacts. Significant changes to the GILTI regime, now referred to as net controlled foreign corporation tested income (NCTI”), reduce the Section 250 deduction and generally increase foreign tax creditability. Meanwhile, FDII changes (renamed “FDDEI”) also reduce the Section 250 deduction and eliminate the allocation of interest and R&E expenditures to deduction-eligible income. These rules are effective for tax years beginning after December 31, 2025.
3. New caps on charitable deductions impact a broad base. Under the revised rules, charitable contributions are only deductible if they exceed 1% of taxable income, with a 10% ceiling and a five-year carryforward for excess contributions. This provision introduces new complexity for corporate donors and requires proactive planning to maximize benefits.
4. Provisions left out may receive future attention. Notably, the final bill excluded controversial items such as the so-called “revenge tax” and changes to the corporate SALT deduction cap. While these didn’t make the cut, they signal possible areas for future legislative attention.

Access to the webinar replay is available upon request. Get in touch to learn more.

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