Cross-border Tax Talks Podcast | ONE BIG BEAUTIFUL PODCAST PART 5: OUTBOUND EDITION | Wade Sutton

Doug McHoney (PwC’s International Tax Services Global Leader) is joined by Wade Sutton, a principal who leads the international tax team in PwC’s Washington National Tax Services practice. Doug and Wade discuss OB-3’s outbound impacts and the ripple effects across the system: CAMT interactions and credit ordering; Section 174 R&E expensing elections; Section 163(j) excluding CFC items and the financing/on-lending response; FDII’s shift to FDDEI, a permanent 14% rate, and 2026 expense apportionment relief; GILTI’s rebrand to Net CFC tested income with a 14% effective rate and ‘directly allocable’ expense questions; inventory-sourcing relief; repeal of the Section 898 one-month deferral; permanent CFC look-through; the Section 958(b)(4) fix; a new Section 951(a)(2)(B) framework; selected technical corrections; and why granular modeling matters now more than ever.


Timestamps and Descriptions
00:00 - Wade Sutton’s role leading PwC WNTS international tax and his summer vacation.
02:40 - OB3 overview and scope of outbound-focused discussion.
03:30 - Cash tax savings vs collateral impacts: setting the modeling lens.
04:50 - CAMT challenges: temporary vs permanent taxpayers; credit ordering under Section 53.
06:30 - Section 174 R&E: domestic expensing/elections; acceleration options into 2025/26.
09:00 - Section 163(j): CFC items carved out; why on-lending and branch income matter.
11:20 - FDII is now FDDEI: permanent 14% rate; no deemed return; onshoring IP momentum.
13:30 - Expense apportionment relief (from 2026): R&E/interest excluded from FDDEI; 2025 caution. Deemed intangible return eliminated
14:45 - GILTI is now Net CFC tested income: 14% with 10% haircut; ‘directly allocable’ ambiguity; what about stewardship?
17:10 - Rethinking high-tax exception under Section 904(b)(4); credits often more valuable.
18:40 - Inventory sourcing relief: branch-based cap allows up to 50% foreign source.
20:30 - Section 898 repeal: Dec-2025 short tax year; FTC accrual allocation awaits guidance.
23:45] Section 954(c)(6) look-through made permanent; structural certainty restored.
26:00 - Section 958(b)(4) fix: targeted rule via Section 951B replaces broad downward attribution.
27:50 -Section 951(a)(2)(B) pro rata share: statute overhaul; regs pending; transition in place.
31:55 - Technical corrections: scope, ‘no inference’ nuance, and practical implications.
33:25 -Closing themes: model interactions (CAMT/BEAT/FTC), watch for guidance.