Treasury and IRS Release Final Regulations under Section 245A and Section 951A Anti-Abuse Rules
Posted on Nov 20, 2020
On November 20, the Department of the Treasury and the Internal Revenue Service released final regulations under sections 245A and 951A. The rules coordinate two anti-abuse rules directed at certain transactions that occurred in 2018 between related controlled foreign corporations. The guidance generally finalizes proposed regulations issued in August 2020, except that the final regulations expand the application of the disqualified basis reduction rule under section 951A. Read More: Final RegulationsRead More: Prior Proposed Regulations
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District Court Holds Section 965 Constitutional
Posted on Nov 20, 2020
On November 19, the U.S. District Court for the Western District of Washington held that the transition tax under section 965 was constitutional. Section 965, enacted by the Tax Cuts and Jobs Act, generally imposes a transition tax on a US shareholder’s pro rata share of the accumulated earnings and profits of certain foreign corporations. The court found that the transition tax was a tax on income allowed under the Sixteenth Amendment and that the transition tax did not violate due process. Read More: Moore v. United States
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Something to Keep an Eye On: Texas Comptroller Says Web-Based Services for Eye Doctors Is Taxable Data Processing
Posted on Oct 6, 2020
The Texas Comptroller of Public Accounts issued a private letter ruling concluding that several services provided to optometrists and ophthalmologists were subject to sales tax as data processing. Specifically, the Comptroller determined that the taxpayer’s web-based software system, which doctors use to manage patient relationships, schedule appointments, refill prescriptions, and communicate about treatment, is a taxable data-processing service. The taxpayer’s software “captures and sends data” to and from the taxpayer’s servers and, according to the Comptroller, constitutes...
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Treasury and IRS Release Final and Proposed Foreign Tax Credit Regulations
Posted on Sep 29, 2020
On September 29, the Department of the Treasury and the Internal Revenue Service released final and proposed regulations that provide guidance with respect to the calculation of foreign tax credits. The final regulations address a variety of computational issues, such as the allocation and apportionment of deductions under sections 861 through 865, the allocation of apportionment of foreign taxes, and the application of the foreign tax credit limitation to consolidated groups. The proposed regulations also address a variety of issues, such as the determination of foreign income taxes subject...
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Mississippi DOR issues marketplace facilitator guidance for food delivery
Posted on Sep 22, 2020
Mississippi Notice 72-20-09 provides additional guidance on Mississippi’s marketplace facilitator law, which took effect on July 1, 2020. The Notice explains that a sale facilitated and delivered by a third-party food delivery service is not a “retail sale” by the facilitator. Rather, the restaurant will charge sales tax on the selling price it charged for the food. But if a third-party delivery company additionally makes direct sales of items from its own inventory, the delivery company must collect and remit sales tax on those sales.
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Treasury and IRS Release Final Regulations on Sales by Foreign Persons of Certain Partnership Interests
Posted on Sep 22, 2020
On September 21, the Department of the Treasury and the Internal Revenue Service released final regulations under section 864(c)(8). Section 864(c)(8) generally treats gain from the sale or exchange by a nonresident alien individual or foreign corporation of an interest in a partnership that is engaged in a trade or business in the United States as effectively connected with such trade or business. The final regulations generally adopt proposed regulations issued in 2018 that provided rules for determining the amount of gain or loss treated as effectively connected with the conduct of a...
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Treasury and IRS Release Final Regulations on Full Expensing under Section 168(k)
Posted on Sep 22, 2020
On September 21, the Department of the Treasury and the Internal Revenue Service released final regulations under section 168(k). Amended by the Tax Cuts and Jobs Act, section 168(k) generally allows full expensing of certain depreciable property. The final regulations generally finalize proposed regulations released in 2019 that address the requirements to qualify for the additional depreciation deduction. Read More: Final RegulationsRead More: 2019 Proposed Regulations
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Treasury and IRS Release Final and Proposed Regulations on Downward Attribution under Section 958(b)
Posted on Sep 21, 2020
On September 21, the Department of the Treasury and the Internal Revenue Service released final and proposed regulations addressing the repeal of section 958(b)(4) by the Tax Cuts and Jobs Act (TCJA). Prior to the TJCA, section 958(b)(4) provided that section 318(a)(3) (downward attribution) did not apply to treat a US person as owning stock owned by a person who is a not a US person. The final regulations generally modify provisions of the Code outside of subpart F and are intended to ensure that the provisions operate in a manner consistent with their operation prior to the repeal of...
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Treasury and IRS Release Final BEAT Regulations
Posted on Sep 1, 2020
On September 1, the Department of the Treasury and the Internal Revenue Service released final regulations under section 59A. Section 59A imposes a base erosion and anti-abuse tax (or BEAT), which generally operates as a minimum tax on income without regard to certain deductible payments made to foreign related parties. The final regulations finalize proposed regulations that were issued in December 2019 and generally provide guidance with respect to the determination of a taxpayer’s aggregate group, provide an election to waive deductions in order to avoid triggering BEAT, and detail...
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Treasury and IRS Release Final and Proposed Regulations under Section 245A
Posted on Aug 21, 2020
On August 21, the Department of the Treasury and the Internal Revenue Service released proposed and final regulations under section 245A. Section 245A allows a 100% deduction to a corporate US shareholder for the foreign-source portion of dividends received from a specified 10% owned foreign corporation (SFC). The final regulations limit the deduction for certain dividends received by United States persons from foreign corporations under section 245A and the look-through rule in section 954(c)(6) for certain dividends received by controlled foreign corporations. The proposed regulations...
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OIRA Completes Review of Final and Proposed Regulations under Section 245A
Posted on Aug 11, 2020
On August 7, the Office of Information and Regulatory Affairs (OIRA) completed its review of regulations finalizing temporary regulations issued last June related to the 100% deduction available to a corporate US shareholder for the foreign-source portion of dividends received from a specified 10% owned foreign corporation (SFC) under section 245A and the look-through rule under section 954. OIRA also completed its review of new proposed regulations that would provide coordination rules regarding the anti-abuse rules under sections 245A and 951A, relating to global intangible low-taxed...
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Treasury and IRS Release Final and Proposed Regulations under Section 163(j)
Posted on Jul 28, 2020
On July 28, the Department of the Treasury and the Internal Revenue Service released final and proposed regulations under section 163(j). Amended by the Tax Cuts and Jobs Act (TCJA), section 163(j) generally limits a taxpayer’s interest deduction to the sum of its business interest income, floor plan financing interest, and 30% of its adjusted taxable income. The provision was further amended by the Coronavirus Aid, Relief, and Economic Security (CARES) Act in 2020 to allow taxpayers to deduct up to 50% of their adjusted taxable income (up from 30%), plus interest income and floor plan...
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IRS Issues Final and Proposed Regulations with Respect to the GILTI and Subpart F High-Tax Exclusions
Posted on Jul 20, 2020
On July 20, the IRS released final regulations that allow taxpayers to elect out of the global intangible low-taxed income (GILTI) provisions if the income is subject to a rate of at least 18.9% in a foreign country. Proposed regulations were also released that generally would revise the subpart F high-tax exception to be consistent with the provisions of the GILTI high-tax exception. Read More: Final Regulations Read More: Proposed Regulations
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OIRA Completes Review of Final Regulations on the GILTI High-Tax Exclusion
Posted on Jul 9, 2020
On July 7, the Office of Information and Regulatory Affairs (OIRA) completed its review of final regulations under section 951A relating to the proposed high-tax exclusion for global intangible low-taxed income (GILTI) and its review of proposed regulations under section 954(b)(4) relating to high-tax subpart F income. Among other provisions, the proposed version of the regulations had generally offered taxpayers an election to exclude income from GILTI if the income was subject to a high rate of foreign tax. OIRA began its review of the regulations on June 16th. Read More: GILTI High-Tax...
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IRS Releases Final Regulations under Section 250
Posted on Jul 9, 2020
On July 9, the Internal Revenue Services issued final regulations under section 250. Section 250 provides a deduction for both foreign-derived intangible income (FDII) and global intangible low-taxed income (GILTI). The final regulations address the documentation and substantiation requirements with respect to the deduction under section 250. Read More: IRS Releases Final FDII, GILTI Deduction Regulations Read More: Final Regulations Read More: Proposed Regulations
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