Section 904 (Limitation on credit) caps the FOREIGN TAX CREDIT (FTC) at the US tax attributable to foreign source taxable income, applied SEPARATELY to each "BASKET" (separate limitation category). Formula: FTC LIMIT = US TAX × (FOREIGN SOURCE TAXABLE INCOME ÷ WORLDWIDE TAXABLE INCOME), computed per basket. Pre-TCJA - FIVE baskets (passive, general, §901(j), treaty resourced, lump-sum distributions). TCJA (P.L. 115-97 December 22, 2017) ADDED TWO baskets: §951A category (GILTI) and FOREIGN BRANCH category - bringing total to SEVEN. OBBBA (P.L. 119-21 July 4, 2025) effective for tax years beginning after December 31, 2025 - RENAMED §951A from GILTI to NCTI ("Net CFC Tested Income"); ELIMINATED QBAI 10% return on tangible assets; reduced §250 deduction from 50% to 40%; INCREASED §960 deemed-paid foreign tax credit on NCTI from 80% to 90% (10% haircut, down from 20%); allowed up to 50% of US-produced inventory sales income to be sourced FOREIGN; CFC look-through rules §954(c)(6) made PERMANENT; §958(b)(4) downward attribution REINSTATED with anti-abuse rules; FDII renamed FOREIGN-DERIVED DEDUCTION ELIGIBLE INCOME (FDDEI) with §250 deduction reduced 37.5% to 33.34% (effective rate ~14%); new §951B added. SEPARATE-BASKET LIMITATION prevents cross-crediting (high foreign tax on one type of income cannot offset US tax on another type). PASSIVE BASKET §904(d)(1) - generally passive investment income (dividends, interest, royalties, rents from passive use, capital gains on stock/securities). GENERAL BASKET §904(d)(1) - active business income, certain financial services income. SPECIFIC EXCLUSIONS from passive: high-taxed kick-out (income subject to foreign tax > highest US rate); export financing interest; high-taxed financial services. §904(d)(3) LOOK-THROUGH RULES - dividends/subpart F/interest/rents/royalties from CFCs assigned to basket based on underlying CFC income character (not character at recipient level). EXCESS LIMITATION CARRYOVER §904(c) - 1-year carryback + 10-year carryforward per basket, BUT NCTI/GILTI basket has NO CARRYOVER. §904(d)(2)(H) sourcing of NCTI - 100% foreign source. Foreign tax credit RULES: §901(b) - direct foreign income taxes; §901(j) - non-creditable taxes (boycott, terrorist countries); §903 - in lieu of foreign income tax; §904 - limitation; §960 - deemed-paid CFC taxes; §905 - timing of crediting. Form 1116 (individuals) / Form 1118 (corporations). Election to deduct vs credit annual.
The limit: FTC LIMIT = US tax × (foreign source taxable income / worldwide taxable income), per basket. Prevents cross-crediting between high-tax and low-tax foreign income types.
Seven baskets (post-TCJA): Passive | General | NCTI/GILTI (§951A) | Foreign Branch | §901(j) (sanctioned countries) | Treaty-resourced | Lump-sum distributions. NCTI/GILTI and Foreign Branch added by TCJA effective 2018.
OBBBA changes effective 2026: GILTI renamed NCTI; QBAI 10% return eliminated; §250 deduction reduced (NCTI 50%→40%, FDII 37.5%→33.34%); NCTI deemed-paid foreign tax credit 80%→90% (haircut 20%→10%); CFC look-through §954(c)(6) made permanent; §958(b)(4) downward attribution reinstated; new §951B added; 50% foreign sourcing allowed for US-produced inventory sales abroad.
Carryover: 1-year back + 10-year forward per basket; EXCEPT NCTI basket has NO carryover (use it or lose it annually).
Look-through §904(d)(3): CFC distributions categorized based on underlying CFC income character; prevents general-basket income converting to passive merely by being distributed as a dividend.
| Basket | Authority | Content |
|---|---|---|
| Passive Category | §904(d)(1)(C); §904(d)(2)(A)(i), (B) | Passive investment income - dividends, interest, royalties (passive), rents (passive use), capital gain on stock/securities; certain specified passive income categories |
| General Category | §904(d)(1)(D); §904(d)(2)(A)(ii) | Active business income; financial services income (not branch); income not falling in other baskets - default catchall |
| NCTI / GILTI Category §951A | §904(d)(1)(A); TCJA addition | Net CFC Tested Income (renamed from GILTI by OBBBA effective 2026); CFC-level income subject to §951A inclusion; NO carryover under §904(c) |
| Foreign Branch Category | §904(d)(1)(B); §904(d)(2)(J); TCJA addition | Income attributable to foreign branch operations of US person; branches of US C-corps |
| §901(j) Sanctioned Country Income | §901(j)(1)(B) | Income sourced from sanctioned countries (Iran, North Korea, Sudan, Syria per Pub. 514 for 2025; Libya meets the description but has a Presidential waiver; confirm the list each year); foreign tax NOT creditable |
| Treaty-Resourced Income | §904(d)(6) | Income resourced under treaty - taxpayer elects to treat US source as foreign source per treaty article |
| Lump-Sum Distributions (Form 4972) | Form 1116, category g | Separate limitation applies only if Form 4972 treatment is elected for a lump-sum distribution; use a separate Form 1116 |
| Step | Detail |
|---|---|
| Step 1 | Determine US tax before FTC = taxable income × applicable rates |
| Step 2 | Compute foreign source taxable income PER BASKET (gross foreign income less allocable deductions) |
| Step 3 | Compute worldwide taxable income |
| Step 4 | FTC limit per basket = US tax × (basket FSTI / WTI) |
| Step 5 | Credit allowed per basket = lesser of (a) foreign taxes paid/accrued in basket or (b) FTC limit for basket |
| Step 6 | Excess foreign tax credit per basket = foreign tax paid - FTC limit; carryover 1 year back + 10 forward (except NCTI - no carryover) |
| Expense allocation | Interest expense, R&E expenses, stewardship, general SG&A allocated to baskets per Reg §1.861-8 through §1.861-14 |
| §904(b)(4) adjustment | For a domestic corporation that is a US shareholder of a specified 10-percent owned foreign corporation, the foreign-source portion of any §245A dividend and deductions properly allocable to it are disregarded in determining both foreign source taxable income and entire taxable income (OBBBA added (b)(5) and (b)(6), not (b)(4)) |
| Separate-basket loss recapture §904(f) | Net loss in one basket reduces income in another; recaptured in later years |
| Overall foreign loss §904(f) | Foreign losses recaptured against future foreign source income |
| Overall domestic loss §904(g) | Domestic losses recaptured against future US source income |
| NCTI/GILTI Element | Pre-OBBBA (Through 2025) | Post-OBBBA (2026+) |
|---|---|---|
| Name | GILTI - Global Intangible Low-Taxed Income | NCTI - Net CFC Tested Income |
| Authority | §951A enacted by TCJA 2017 | §951A renamed by OBBBA P.L. 119-21 |
| QBAI 10% return on tangible assets | Reduced GILTI by 10% of QBAI | ELIMINATED - all CFC tested income subject to NCTI |
| §250 deduction | 50% deduction (effective rate 10.5%) | 40% deduction (effective rate 12.6%) |
| §960 deemed-paid foreign tax credit | 80% × CFC's foreign taxes attributable to tested income | 90% × CFC's foreign taxes (10% haircut, down from 20%) |
| FTC carryover | NO carryover | NO carryover |
| Expense allocation (§904(b)(5) from 2026) | Interest, R&E, SG&A allocated to NCTI basket - reduces FTC limit | OBBBA §70311(a) adds §904(b)(5) - no interest or R&E allocated to NCTI income; other deductions (e.g., SG&A) only if "directly allocable"; the §250(a)(1)(B) deduction is allocated to NCTI |
| Foreign tax rate needed for no residual US tax on NCTI | ~13.125% (10.5% effective US rate / 80%) | ~14% (12.6% effective US rate / 90%); reduced from the ~16.4% that the pre-OBBBA 2026 law (13.125% / 80%) would have required |
| Tested income basket | NCTI distributions allocated to NCTI basket | Same - NCTI inclusions in NCTI basket |
| Subpart F vs NCTI planning | Subpart F (general basket) often preferred to GILTI (no carryover) | Same planning consideration - subpart F more flexible |
| Foreign Branch Element | Detail |
|---|---|
| Authority | §904(d)(2)(J) - added by TCJA P.L. 115-97 |
| Effective date | Tax years beginning after December 31, 2017 |
| Definition | Income attributable to foreign branch of US person (typically US C-corp with foreign permanent establishment) |
| Branch determination | "Qualified business unit" (QBU) per §989(a)(2) - clear and separate set of books for foreign location |
| FTC limitation | Separate basket - foreign branch foreign tax cannot cross-credit other baskets |
| Sourcing | Generally foreign source per §865/§862 |
| Inventory sourcing OBBBA | OBBBA allows up to 50% of US-produced inventory sold abroad through foreign branch to be foreign source - more FTC capacity |
| Carryover | 1-year back + 10-year forward per §904(c) |
| Disregarded entity | Single-member foreign LLC owned by US C-corp - branch for tax purposes |
| Branch vs CFC structure | Branch - immediate US tax on all earnings; CFC - subpart F or NCTI inclusion only on tested income |
| Look-Through Element | Detail |
|---|---|
| Authority | §904(d)(3) - CFC look-through rules; CFC-to-CFC payments §954(c)(6) (now PERMANENT under OBBBA) |
| Purpose | Categorize income based on underlying CFC income character, not character in hands of US shareholder |
| Covered payments | Dividends, subpart F inclusions, GILTI/NCTI inclusions, interest, rents, royalties from CFC to US shareholder or related CFC |
| Categorization | Allocated to baskets based on CFC's underlying income; if CFC's income is general basket at CFC level, dividend distribution stays general at shareholder level |
| NCTI inclusions | Treated as passive only to extent attributable to passive tested income of CFC - rarely applies (most passive income is subpart F, excluded from tested income) |
| §954(c)(6) permanency | OBBBA made CFC-to-CFC look-through permanent (prevented sunset) |
| Coordination with high-tax exception | §954(b)(4) high-tax exception election removes subpart F from CFC level - then NCTI basket would apply to look-through |
| Tiered CFC structures | Look-through chains through multiple CFC levels |
| High-Tax Kick-Out Element | Detail |
|---|---|
| Authority | §904(d)(2)(B)(iii)(II); §954(b)(4); Reg §1.904-4(c) |
| Rule | Passive category income with foreign effective tax rate exceeding highest US rate is "kicked out" of passive basket and reclassified to general basket |
| 2026 highest US rate | 37% individual / 21% corporate |
| Test | Foreign tax > applicable highest US rate × pre-credit foreign source taxable income for category |
| Effect | Allows excess foreign tax (>US rate) to potentially cross-credit general basket income |
| Election under §954(b)(4) | CFC-level - elects out of subpart F if effective foreign tax rate exceeds 90% of highest US corporate rate (18.9% for 2026) |
| Subpart F GILTI/NCTI high-tax exception | Allows electing out of GILTI/NCTI inclusion if effective rate exceeds 90% threshold; income then NOT included in US shareholder's gross income |
| Planning tradeoff | HTKO removes income from passive basket - may help if passive basket has excess limit; but loses ability to defer FTC carryover separately |
| Carryover Element | Detail |
|---|---|
| Carryback | 1 year - excess taxes are deemed paid or accrued in the first preceding year to the extent of that year's unused limitation (if the credit was chosen for that year) |
| Carryforward | 10 years per basket |
| NCTI basket exception | NO carryover - use it or lose it annually |
| Per-basket tracking | Carryovers segregated by basket - cannot cross between baskets |
| Application order | Current-year taxes first; then carryovers to the extent of remaining limitation (earlier years first) |
| Election to credit vs deduct | Annual election - take all foreign income tax as credit OR as deduction; once election made, all-or-nothing for the year |
| Form 1116 Schedule B | Reconciliation of FTC carryovers per basket |
| Stacking | 10-year FCFs accumulate; may expire unused if foreign source income too small in basket |
| Major TCJA TCJA reset | TCJA effective dates - pre-2018 carryovers transitioned to new baskets via mapping rules |
| OBBBA Indirect Effect | Detail |
|---|---|
| §163(j) interest limitation modifications | Modified EBITDA add-back computation may affect interest allocation to foreign source income |
| §174 R&E retroactive expensing | OBBBA §174A expenses domestic R&E paid or incurred in tax years beginning after December 31, 2024; only small businesses meeting the §448(c) gross receipts test could elect retroactive application to 2022-2024 (one-year election window), and other taxpayers may deduct unamortized 2022-2024 amounts in 2025 or ratably over 2025-2026; changes are generally cut-off with no §481(a) adjustment |
| §70311(a) NCTI expense allocation | Interest and R&E NOT allocated to NCTI for §904 purposes; other deductions only if "directly allocable" (§904(b)(5)) - reduces over-allocation |
| FDII / FDDEI rules parallel | OBBBA's FDDEI provisions (formerly FDII) - parallel rules under §250(b)(3): DEI is reduced by deductions (other than interest expense and R&E) properly allocable to gross DEI; proposed regulations (REG-117273-25, September 11, 2026) would implement this in Treas. Reg. §1.250(b)-1, and the stewardship and legal expense "not directly allocable" rule in that proposal applies to NCTI under §904(b)(5), not to DEI |
| BEAT increase | OBBBA increased BEAT rate; FTC interaction with BEAT requires modeling |
| §951B new | Added by OBBBA §70353(b): amounts included in gross income of foreign controlled United States shareholders of foreign controlled foreign corporations; effective for taxable years of foreign corporations beginning after December 31, 2025 |
| Inventory sourcing 50% | OBBBA allows up to 50% foreign sourcing for US-produced inventory sold abroad through foreign office/PE; increases foreign branch FTC capacity |
| §958(b)(4) downward attribution reinstated | OBBBA narrows CFC determinations - reduces incidental CFC classifications; affects FTC computations |
| PTEP haircut | §960(d)(4): no credit for 10% of foreign income taxes paid or accrued (or deemed paid under §960(b)(1)) with respect to amounts excluded under §959(a) by reason of a §951A inclusion in a taxable year of the U.S. shareholder ending after June 28, 2025 (Notice 2025-77 §3.01(2)) |
Facts: James (US citizen) for 2026:
Worldwide taxable income: $500,000
US source: $300,000
Foreign source - General basket: $100,000 (active foreign business income); foreign tax $35,000
Foreign source - Passive basket: $80,000 (foreign dividends); foreign tax $12,000
Foreign source - NCTI basket: $20,000 (CFC tested income inclusion); foreign tax $4,000 (creditable only if Client makes a §962 election - §960(d) applies to a domestic corporation - and a §962 elector is taxed on the inclusion at §11 corporate rates, so this example is simplified)
Pre-FTC US tax: $145,000 (effective rate 29%)
Step 1 - FTC limit per basket:
General: $145,000 × ($100,000 / $500,000) = $29,000
Passive: $145,000 × ($80,000 / $500,000) = $23,200
NCTI: $145,000 × ($20,000 / $500,000) = $5,800
Step 2 - Credit allowed per basket (lesser of tax paid or limit):
General: Tax $35,000; limit $29,000 → credit $29,000; excess $6,000 (carryback 1 / forward 10)
Passive: Tax $12,000; limit $23,200 → credit $12,000 (no excess; $11,200 unused limit)
NCTI: Tax $4,000; limit $5,800 → credit $4,000 (no excess; $1,800 unused limit; NO CARRYOVER)
Step 3 - Total FTC and US tax:
Total FTC: $29,000 + $12,000 + $4,000 = $45,000
US tax after FTC: $145,000 - $45,000 = $100,000
Effective US tax on $500,000: 20%
Step 4 - Carryover tracking:
General basket excess: $6,000 - carries back to 2025 (to the extent of unused limitation) and then forward through 2036
Passive unused limit: $11,200 - cannot be used by other baskets and does not itself carry over; it only matters if passive-basket excess taxes from other years exist to absorb
NCTI: $1,800 unused limit lost (no carryover)
Step 5 - High-tax kick-out test on passive:
Passive foreign rate: $12,000 / $80,000 = 15% - below 37% US rate → NO HTKO; stays passive
| Form 1116 Element | Detail |
|---|---|
| Filing | Individuals - one Form 1116 PER BASKET; multiple forms common |
| Part I | Taxable income from foreign source by basket |
| Part II | Foreign taxes paid or accrued |
| Part III | FTC computation with limitation |
| Part IV | Summary across baskets |
| Schedule B | FTC carryover/carryback reconciliation per basket |
| De minimis exception | Form 1116 not required if all foreign source gross income is passive category income, total creditable foreign tax is not more than $300 single / $600 MFJ, and the income and taxes are shown on a qualified payee statement (e.g., 1099-DIV/INT) - elect to take credit directly on Schedule 3 |
| Election to deduct | If FTC limit zero or unfavorable, elect to deduct foreign tax instead under §164 - on Schedule A (Form 1040) |
| Form 1118 (corporations) | More complex; separate Form 1118 per category; Schedule D for taxes deemed paid on §951A inclusions; Schedule J for adjustments to separate limitation income and OFL/ODL accounts; Schedule K for carryover reconciliation |
| Form 8993 (FDII/FDDEI) | §250 deduction computation |
| Income Type | Sourcing Rule |
|---|---|
| Compensation §861(a)(3) | Where services performed |
| Interest §861(a)(1) | Residence of payor |
| Dividends §861(a)(2) | Residence of payor (US corp = US source; foreign corp = foreign source) |
| Royalties §861(a)(4) | Where intangible used |
| Rents from real property §861(a)(4) | Where property located |
| Sale of inventory §861(a)(6); §862(a)(6) | Title passage rule generally; manufactured inventory split rules; OBBBA §904(b)(6) - for §904 purposes only, income from US-produced inventory sold abroad that is attributable to a foreign office or fixed place of business is foreign source, capped at 50% of the income |
| Sale of personal property §865 | Generally residence of seller (US seller = US source); exceptions for inventory, intangibles, depreciable property |
| Sale of real property §861(a)(5); §862(a)(5) | Location of property |
| NCTI §951A(d)(1)(A); §904(h) | Generally foreign source, but treated as US source to the extent provided in §904(h) for amounts derived from a United States-owned foreign corporation |
| Treaty resourcing | Election to treat US source as foreign source per treaty article |
Foreign tax on passive income (15-25%) cannot offset US tax on general basket income. Per-basket limitation strict. Common error - claiming all FTC against US tax broadly without basket tracking.
NCTI basket excess FTC LOST annually - no 10-year carryforward. Plan to use NCTI FTC currently or lose. Different from other baskets which carry forward 10 years.
2026 returns - GILTI is now NCTI. Form references and statutory citations need updating. Mechanics largely preserved but QBAI eliminated and §250 deduction reduced.
OBBBA eliminated QBAI 10% return on tangible assets effective 2026. Some software may still apply pre-OBBBA QBAI exclusion. Verify 2026 calculations.
2025: 50% NCTI / 37.5% FDII. 2026 (OBBBA): 40% NCTI / 33.34% FDDEI. Effective rates change from 10.5% (NCTI) / 13.125% (FDII) to 12.6% (NCTI) / ~14% (FDDEI). Update calculations.
OBBBA §70311(a) (§904(b)(5)) - interest and R&E NOT allocated to NCTI; other deductions only if "directly allocable." Pre-OBBBA allocation rules over-allocated, reducing FTC. Confirm 2026 software updated.
Foreign branch - taxed currently; foreign branch basket. CFC - subpart F or NCTI inclusion only. Different baskets, different FTC mechanics. Get the structural determination right.
§904(d)(3) - dividends from CFC categorized based on UNDERLYING CFC income character. Pre-tested CFC distributions look through to CFC's underlying income; not the character of the dividend itself.
Passive category income with foreign tax > US highest rate kicked to general basket - allows cross-credit. Practitioners may miss the kick-out when foreign tax is very high.
CFC-level election to exclude high-taxed income from subpart F (and possibly GILTI/NCTI). Available if effective rate exceeds 90% of US corporate rate (18.9% for 2026). Major planning election.
§901(j) - taxes paid to sanctioned countries (Iran, North Korea, Sudan, Syria) NOT creditable. Tax on services performed in sanctioned country - non-creditable. Net Investment Tax (foreign equivalents to NIIT) generally creditable per Reg §1.901-2.
Annual election - all foreign tax as credit OR all as deduction. The election may be made or changed within the period prescribed by Reg. §1.901-1(d) (10-year period of §6511(d)(3) for the credit; §6511(a) or (c) period for the deduction). If basket excess limits FTC heavily, deduction may be better. Model both alternatives.
All foreign source income passive, total creditable foreign tax not more than $300 single / $600 MFJ, and income and tax shown on a payee statement such as 1099-DIV/INT - elect to skip Form 1116 and take credit directly. Simpler. Many practitioners file Form 1116 unnecessarily.
§904(d)(6) - treaty article allowing resource of US source income to foreign source for treaty country tax credit. Election required; one form Form 8833 disclosure. Common with US-Canada, US-Mexico treaty.
OBBBA §960(d)(4) - no credit for 10% of foreign income taxes paid or accrued (or deemed paid under §960(b)(1)) with respect to PTEP excluded under §959(a) by reason of a §951A inclusion in a taxable year of the U.S. shareholder ending after June 28, 2025 (Notice 2025-77 §3.01(2)). Reduces FTC on distributions of that post-June 28, 2025 NCTI/GILTI PTEP; PTEP from inclusions in shareholder years ending on or before June 28, 2025 is not affected.
OBBBA allows up to 50% foreign source for US-produced inventory sold abroad through foreign office or fixed place of business - increases foreign branch FTC capacity. Pre-OBBBA was more restrictive.
Proposed regulations (REG-117273-25, 91 Fed. Reg. 57832, September 11, 2026; comments due November 10, 2026) would treat stewardship and legal expenses as not directly allocable to foreign source NCTI income, with excluded deductions reallocated to US source income. The statute (§904(b)(5)(C)) already limits other deductions to those "directly allocable" for tax years beginning after December 31, 2025, and taxpayers may rely on the proposed regulations if applied in their entirety.
Primary authority: IRC §904 (Limitation on credit - foreign tax credit). §904(a) (general limitation formula). §904(b) (taxable income from sources without the United States). §904(b)(4) (dividends eligible for the §245A deduction - disregarded in foreign source and entire taxable income). §904(b)(5) (deductions allocable to NCTI - added by OBBBA). §904(b)(6) (US-produced inventory sold through foreign branches - added by OBBBA). §904(c) (carryback and carryover - 1 year back, 10 forward; except NCTI no carryover). §904(d)(1) (separate application of section). §904(d)(1)(A) (NCTI/§951A category - renamed by OBBBA). §904(d)(1)(B) (foreign branch category). §904(d)(1)(C) (passive category). §904(d)(1)(D) (general category). §901(j) (sanctioned countries - separate limitation per country). §904(d)(2) (definitions and special rules). §904(d)(2)(A) (passive and general category definitions). §904(d)(2)(B) (passive income; high-taxed income exception at (B)(iii)(II)). §904(d)(2)(H)(i) (taxes on amounts that are not income under US principles are general category). §904(d)(2)(J) (foreign branch income). §904(d)(3) (look-through rules - CFC distributions categorized based on underlying CFC income). §904(d)(6) (treaty-resourced income basket). §904(f) (overall foreign loss recapture). §904(g) (overall domestic loss recapture). §901 (taxes of foreign countries - credit allowed). §901(b) (foreign income taxes - direct credit). §901(j) (non-creditable taxes - sanctioned countries). §903 (in lieu of foreign income tax - certain compulsory payments). §905 (timing of crediting foreign taxes). §951A (Net CFC Tested Income - RENAMED by OBBBA from GILTI effective tax years beginning after December 31, 2025). §951B (NEW under OBBBA). §954(c)(6) (CFC look-through - made PERMANENT by OBBBA). §954(b)(4) (high-tax exception election). §958(b)(4) (downward attribution - REINSTATED by OBBBA with anti-abuse rules). §960 (deemed paid credit for taxes of CFC). §960(d) (NCTI deemed paid - 90% post-OBBBA, up from 80%). §250 (foreign-derived intangible income / FDDEI deduction - 40% NCTI, 33.34% FDDEI post-OBBBA). §245A (participation exemption - dividends received deduction). §163(j) (interest limitation - modified by OBBBA). §174A (domestic R&E expensing - OBBBA, tax years beginning after December 31, 2024; small-business retroactive election). §59A (BEAT - rate increased by OBBBA). §861 (income from sources within US). §862 (income from sources without US). §865 (sale of personal property sourcing). §989 (qualified business unit definition). Reg §1.861-8 through §1.861-14 (expense allocation regulations). Reg §1.904-4 (separate categories of income - high-tax kick-out). Reg §1.904-4(c)(4) (passive grouping rules). Reg §1.904-5 (look-through rules). Reg §1.904-6 (allocation of CFC foreign taxes). Reg §1.901-2 (foreign income tax definition). Form 1116 (Foreign Tax Credit - individuals). Form 1118 (Foreign Tax Credit - corporations). Form 8993 (§250 deduction). Form 5471 (Information Return of US Persons With Respect to Certain Foreign Corporations). Schedule J (Form 5471) - earnings and profits / NCTI. Tax Cuts and Jobs Act P.L. 115-97 (December 22, 2017) - added NCTI/GILTI and foreign branch baskets; effective 2018. One Big Beautiful Bill Act P.L. 119-21 (July 4, 2025) §70311(a) - expense allocation to NCTI; §70312 - 90% deemed paid; FDII/FDDEI rate reduction; QBAI elimination; §954(c)(6) permanency; §958(b)(4) reinstatement; new §951B; 50% inventory foreign sourcing.