Rev. Proc. 2021-26, May 11, 2021
Qualified business asset investment (QBAI) is a component of the §951A GILTI inclusion formula. Generally, QBAI is the quarterly average of depreciable assets of the CFC calculated using ADS under §168(g). ADS is required to depreciate tangible property used predominantly outside the US but not all CFC’s may use this method. A CFC may instead apply a depreciation method used in keeping the books of account that it regularly maintains for accounting to its shareholders or a method consistent with U.S. generally accepted accounting principles (a “non-ADS method”), provided the adjustments required to conform to ADS are not material.
As a result of the ADS requirement for GILTI, some CFCs may want to switch their method to ADS which previously required the consent of the IRS. Under this Revenue Procedure, a CFC may be able to obtain the automatic consent of the Commissioner to change its method of accounting for depreciation of property.