BEAT

Question 1

What is base erosion percentage?

Answer 1

Base erosion tax benefits/total deductions (excluding any deduction not allowed in determining taxable income)

Question 2

What are base erosion payments?

Answer 2

Any amount paid or accrued by the taxpayer
- to a foreign person which is a related party of the taxpayer and
- with respect to which a deduction is allowable.
A base erosion payment also includes:
- (1) Purchase of depreciable property.
- (2) Reinsurance payments.
- (3) Payments to expatriated entities.
○ (i) to a surrogate foreign corporation (60% owned) which is a related party of the taxpayer, but only if that person first became a surrogate foreign corporation after Nov. 9, 2017, or
○ (ii) a foreign person which is a member of the same expanded affiliated group as the surrogate foreign corporation.