Based on the election of the DCE, a CE-owner located in the State that is not an Investment Entity may apply the Taxable Distribution Method Election concerning the Ownership Interest it holds in a CE that is an Investment Entity, provided that it is reasonably expected that the CE owner will be subject to tax on the distributions from the Investment Entity at a tax rate equal to or exceeding the Minimum Tax Rate.
The following clauses must be considered when applying the Taxable Distribution Method:
Distributions and deemed distributions of the Investment Entity’s GloBE Income are included in the GloBE Income of the Constituent Entity-owner (other than an Investment Entity) that received the distribution
The Local Creditable Tax Gross-up is included in the GloBE Income and Adjusted Covered Taxes of the CE-owner, other than an Investment Entity, that received the distribution;
The CE-owner’s proportionate share of the Investment Entity’s Undistributed Net GloBE Income for the Tested Period is treated as GloBE Income of the Investment Entity for the Reporting Tax Period
The Investment Entity’s GloBE Income or Loss for the Tax Period and any Adjusted Covered Taxes attributable to such income are excluded from all Effective Tax Rate computations under Chapter 5 and Article 56 of these ERs, except as provided in clause (2) of this paragraph.
The Undistributed Net GloBE Income for a Tax Period is the amount of the Investment Entity’s GloBE Income, if any, for the Tested Period reduced (but not below zero) by:
Any Covered Taxes of the Investment Entity;
distributions and deemed distributions to shareholders other than CE that are Investment Entities in the Testing Period;
GloBE Losses arising in the Testing Period; and
Investment Loss Carry-forwards.
Undistributed GloBE income for the Tested Tax Period cannot be reduced by distributions or deemed distributions to the extent that such distributions were treated as a reduction of undistributed GloBE income in a previous tested period.