Form 8992 is the IRS return a U.S. shareholder uses to calculate and report Global Intangible Low-Taxed Income (GILTI) from any controlled foreign corporation (CFC) they own at least 10% of. Schedule A of the form aggregates CFC-level figures pulled from Form 5471 and produces the single GILTI inclusion that flows onto your Form 1040 or Form 1120. Starting with tax years beginning in 2026, the One, Big, Beautiful Bill Act renames this income category “Net CFC Tested Income” (NCTI) and adjusts several percentages inside the calculation.1Internal Revenue Service. One, Big, Beautiful Bill Provisions Most practitioners still say GILTI, so both terms appear below.
Who Has to File Form 8992
Two tests decide whether the form is yours to file. You must be a U.S. shareholder, meaning a U.S. person who owns 10% or more of either the total combined voting power or the total value of all stock classes of a foreign corporation.2Office of the Law Revision Counsel. 26 U.S. Code 951 – Amounts Included in Gross Income of United States Shareholders Ownership can be direct, indirect through another entity, or constructive under Section 958.
The foreign corporation must also be a CFC, which means U.S. shareholders collectively own more than 50% of the voting power or value of the stock.3Office of the Law Revision Counsel. 26 U.S. Code 957 – Controlled Foreign Corporations If both tests are met, you owe tax on your share of the CFC’s income in the year it’s earned, whether or not any cash is distributed.
The Constructive Ownership Trap
The 10% and 50% thresholds sound simple, but attribution rules pull in people who don’t realize they qualify. Under Section 958, you’re treated as owning stock held by your spouse, children, grandchildren, and parents, plus stock held by partnerships, trusts, estates, and corporations you have an interest in.4Internal Revenue Service. IRC 958 Rules for Determining Stock Ownership A 5% direct holder can cross the 10% line once a family member’s stake is attributed. Missing this is one of the most common reasons a filing obligation gets overlooked.
The Forms That Go With Form 8992
GILTI reporting is a chain, and each form feeds the next.
- Form 5471 reports the ownership and finances of each CFC. Schedule I-1 is where CFC-level figures like tested income, tested loss, and Qualified Business Asset Investment (QBAI) are calculated.5Internal Revenue Service. Instructions for Form 5471
- Form 8992 and its Schedule A pull those Schedule I-1 numbers from each CFC and aggregate them into your GILTI inclusion.6Internal Revenue Service. About Form 8992
- Form 8993 is where a domestic C corporation (or an individual making a Section 962 election) claims the Section 250 deduction.7Internal Revenue Service. IRC Section 250 Deduction
- Form 1118 (corporations) or Form 1116 (individuals) claims foreign tax credits against the U.S. tax on GILTI.
- The final inclusion lands on Form 1120 or Form 1040.
How the Calculation Works
The math on Form 8992 targets foreign earnings that exceed a routine return on tangible business assets. The excess is treated as intangible income, and that excess is your GILTI.
Tested Income and Tested Loss
For each CFC, tested income is gross income minus allocable deductions, after stripping out categories taxed under other regimes: Subpart F income, income effectively connected with a U.S. trade or business, certain related-party dividends, and foreign oil and gas extraction income.8Office of the Law Revision Counsel. 26 U.S. Code 951A If deductions exceed qualifying gross income, you have a tested loss instead.
You then take your pro rata share of each CFC’s tested income or loss and add them together. That total is your Net CFC Tested Income. Tested losses from one CFC offset tested income from another.
QBAI and the Deemed Tangible Income Return
QBAI represents the tangible asset base that generates the “routine” return excluded from GILTI. For each CFC with tested income, QBAI is the average of the CFC’s adjusted bases in specified tangible depreciable property at the close of each quarter, computed using the Alternative Depreciation System.9Internal Revenue Service. Concepts of Global Intangible Low-Taxed Income Under IRC 951A Tested-loss CFCs contribute zero QBAI.
The routine return is 10% of your pro rata share of aggregate QBAI, reduced by your pro rata share of specified interest expense. That gives you the Net Deemed Tangible Income Return.9Internal Revenue Service. Concepts of Global Intangible Low-Taxed Income Under IRC 951A
The Final Inclusion
Your GILTI is the excess of Net CFC Tested Income over the Net Deemed Tangible Income Return. If the deemed return equals or exceeds tested income, GILTI is zero. A CFC with heavy fixed assets and modest profits may generate no inclusion; a CFC with high profits and few physical assets will generate a larger one.
What Schedule A Actually Reports
Schedule A lays out each CFC in its own row: tested income, tested loss, your pro rata share of each, your pro rata share of QBAI, tested interest income, and tested interest expense. Each figure ties back to Schedule I-1 of the matching Form 5471.10Internal Revenue Service. Instructions for Form 8992 Schedule A also computes a GILTI allocation ratio for each tested-income CFC, which controls how the total inclusion is allocated back to individual CFCs for deemed-paid foreign tax credit purposes. If you hold CFCs across several countries, this allocation drives your credit amount.
What Changes for 2026
Three numbers move for tax years beginning in 2026. The category is renamed Net CFC Tested Income. The Section 250 deduction for domestic C corporations becomes 40% of the inclusion (including any Section 78 gross-up), replacing the 50% deduction that applied through 2025.11Office of the Law Revision Counsel. 26 U.S. Code 250 The deemed-paid foreign tax credit for GILTI-related foreign taxes moves to 90%, up from 80%.12Office of the Law Revision Counsel. 26 U.S. Code 960 The remaining 10% of foreign tax is a permanent cost.
One credit rule catches filers off guard: GILTI foreign tax credits sit in their own Section 904 basket, and any unused credits in that basket cannot be carried back or forward. Excess credits in a given year are permanently lost.9Internal Revenue Service. Concepts of Global Intangible Low-Taxed Income Under IRC 951A
Individual Filers and the Section 962 Election
The Section 250 deduction and the deemed-paid foreign tax credit are generally available only to domestic C corporations. An individual U.S. shareholder is otherwise taxed on GILTI at ordinary rates up to 37% with no deduction and no deemed-paid credit.
A Section 962 election lets an individual be taxed on GILTI as if the income were received by a domestic corporation: the 21% corporate rate applies, and the Section 250 deduction and deemed-paid credit become available.13Internal Revenue Service. IRC Section 250 Deduction14GovInfo. 26 CFR 1.962-1 – Limitation of Tax for Individuals The election is annual and applies to all Section 951A inclusions for the year. The trade-off: when the earnings are later distributed as an actual dividend, the individual owes additional tax on the distribution to the extent it exceeds the tax already paid under Section 962. Whether the election pays off depends on the foreign tax rate, the individual’s marginal rate, and expected distribution timing.
The High-Tax Exclusion
If a CFC already pays enough foreign tax, the income can drop out of the GILTI calculation entirely through the high-tax exclusion. The threshold is 90% of the U.S. corporate rate. At a 21% corporate rate, income taxed at an effective foreign rate above 18.9% qualifies.
The rate is based on actual tax paid, not the foreign statutory rate. Tax holidays, incentives, and deductions can pull a CFC’s effective rate below 18.9% even in a country with a headline rate of 25% or more. The election is annual, made at the tested-unit level (generally each CFC or branch), and it’s all-or-nothing: it applies to every qualifying tested unit across all your CFCs. You cannot pick and choose.
Penalties for Missing the Related Filing
The heaviest penalties attach to Form 5471, not Form 8992 itself. Failure to file Form 5471 on time, or filing one that is substantially incomplete, triggers an initial penalty of $10,000 per form, per annual accounting period.15Internal Revenue Service. Failure to File the Form 5471 – Category 4 and 5 Filers If the failure continues after the IRS sends a 90-day notice, a continuation penalty of $10,000 applies for every 30-day period (or fraction) that passes, capped at $50,000 per form, per year. Total exposure reaches $60,000 per CFC, per year, and these penalties apply even if no additional tax is owed, because Form 5471 is an independent information return.