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December 12, 2019

Nebraska Department of Revenue issues guidance on treatment of GILTI and FDII

In General Information Letter (GIL) 24-19-3 (released December 10, 2019), the Nebraska Department of Revenue (Department) explained the state's income tax treatment of global intangible low taxed income (GILTI) and foreign derived intangible income (FDII).

A GIL is advisory in nature but binding on the Department until amended or superseded.

Conformity to federal tax law

Nebraska's income tax law conforms to the Internal Revenue Code provisions on GILTI and FDII, which were created by the Tax Cuts and Jobs Act (P.L. 115-97).

GIL 24-19-3 clarifies that GILTI and FDII deductions are included in Nebraska taxable income because they are included in federal taxable income. As such, they must be reported on the Nebraska corporate income tax return. The Department goes on to say that GILTI is not eligible for the Nebraska deduction for dividends or deemed dividends under Neb. Rev. Stat. 77-2716(5) because the IRC and related Treasury Regulations establish that GILTI is not a foreign dividend.

Under GIL 24-19-3, a corporate taxpayer that is taxable in both Nebraska and one or more other states must include its share of GILTI income in its sales factor denominator. In determining whether the GILTI amount is included in the taxpayer's sales factor numerator, the taxpayer must apply the situsing rules for certain investment income in Neb. Rev. Stat. 77-2734.14(3)(d) (dealing with interest, dividends, investment income and other net gains from transactions in intangible assets held in a treasury function).

GIL 24-10-3 states that GILTI is presumed to be included in a taxpayer's Nebraska sales factor numerator if its commercial domicile is in Nebraska. The taxpayer can rebut the presumption that the relevant activities occurred at its commercial domicile if it can show that the investment, management, and record-keeping activities associated with the controlled foreign corporation from which the GILTI income is derived occurs outside Nebraska. If the corporate taxpayer's commercial domicile is in another state, GIL 24-19-3 states that none of the GILTI income should be included in the Nebraska sales factor numerator unless it conducts relevant activities (i.e., investment, management, and recordkeeping) in Nebraska.


Taxpayers must consider this guidance in completing their Nebraska corporate income tax returns. Nebraska returns already filed for tax year 2018 should be reviewed for compliance with the guidance set forth in GIL 24-19-3. EY will continue to monitor developments in this area.


Contact Information
For additional information concerning this Alert, please contact:
State and Local Taxation Group
   • Bill Nolan (

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