Does anyone know where to report GILTI Deemed Paid Tax for individual tax return? We report it on schedule 5 as IRC 1341 credit, and now we receive a notice from IRS.

[michael-zhang]

One of our client is US shareholder of a CFC. We help him to file the GILTI tax. He paid tax to foreign government and elected sec 962, so he could get a GILTI deemed paid tax credit. We report the credit on Schedule 5 as "IRC 1341" credit, and now we received letter from IRS... Do anyone know where we should report the credit?

[itonewbie]

The IRS is probably questioning the validity of the claim of right credit.  Shouldn't the deemed paid foreign tax credit flow through Schedule 3, Part I?

[michael-zhang]

Yes, the IRS is proposing to disallow the amount claimed on Line 74 of Form 1040 as IRC 1341 Claim of Right Credit. I think you are right, it should flow through nonrefundable credit, schedule 3, but I'm not sure which line of schedule 3... I don't think the deemed paid tax credit is the normal foreign tax credit... I don't know where I could enter that number in schedule 3...

[itonewbie]

Use Line 6 instead of Line 1 and use Box (c).  Otherwise, the IRS will be looking for that number from F.1116.