Global Minimum Tax Act — G-3.3 18
ing the revocation year. Fair value and impairment accounting — election (22) If a filing constituent entity elects under this subsection, in respect of a jurisdiction, to determine gains and losses using the realization principle for the purpose of computing GloBE income or loss for a fiscal year, the following rules apply: (a) the election is a five-year election; (b) the election applies to (i) all entities that are (A) if the filing constituent entity specifies in the election that it is to apply only to investment entities, group entities that are investment entities that are located in the jurisdiction, and (B) in any other case, group entities that are located in the jurisdiction, and (ii) all assets and, if clause (B) applies, all liabilities that are (A) if the filing constituent entity specifies in the election that it is to apply only to tangible assets, tangible assets subject to fair value accounting or impairment accounting, and (B) in any other case, assets and liabilities subject to fair value accounting or impairment accounting; (c) if the election applies to a constituent entity for a fiscal year, (i) gains or losses attributable to fair value or impairment accounting with respect to assets or liabilities to which the election applies are excluded in computing GloBE income or loss of the constituent entity for the fiscal year, and (ii) for the purpose of determining a gain or loss in respect of an asset or liability that is subject to the election, the carrying value of the asset or liability is its carrying value at the later of (A) the beginning of the first fiscal year to which the election applies, and (B) the date on which the asset was acquired or the liability was incurred; and (d) if the election is revoked and a constituent entity to which the election applied holds an asset or liability to which the election applied at the beginning of the revocation year, the constituent entity’s GloBE income or loss for the revocation year includes the positive or negative amount determined by the formula A − B where A is the fair value of the asset or liability at the beginning of the revocation year, and B is the carrying value of the asset or liability as determined under subparagraph (c)(ii). Aggregate asset gain — election (23) If the filing constituent entity elects under this subsection in respect of the aggregate asset gain for a fiscal year (referred to in this subsection as the “election year”) of the constituent entities of the MNE group that are located in a particular jurisdiction (each referred to in this subsection as a “local entity”), the following rules apply: (a) covered taxes with respect to any net asset gain or net asset loss of a local entity in the election year are to be excluded in computing adjusted covered taxes; (b) GloBE income or loss of local entities for the election year (i) excludes any amounts allocated to local entities under paragraph (d) or (e) (other than any amount allocated to the election year under paragraph (e)), and (ii) includes any amounts allocated to the election year under paragraph (e); (c) for the purposes of subsection 31 (1), GloBE income or loss, of a local entity for a fiscal year, is adjusted as follows: (i) an amount allocated to a local entity under paragraph (d) for a fiscal year reduces the entity’s net asset loss for that year, and (ii) an amount allocated to a local entity under paragraph (e) for a fiscal year is included as income for that year; (d) amounts in respect of the aggregate asset gain are carried back to loss years within the look-back period, in order from the earliest loss year to the latest loss year, and allocated to the local entities for those loss years, with the amount allocated to any particular local entity for any particular loss year being determined by the formula A × B ÷ C where A is the lesser of (i) the aggregate asset loss of local entities for the particular loss year, less the total of the amounts, if any, already alloca