IRS Allows Election Relief for Bonus Depreciation
Posted on Aug 1, 2019
On July 31, 2019, the IRS issued Rev. Proc. 2019-33, which allows taxpayers to change their elections regarding bonus depreciation for property acquired after September 27, 2017 and placed in service during the taxpayer’s 2016 or 2017 taxable year. Under the revenue procedure, a taxpayer may make late elections to use bonus depreciation on such property or revoke its election to use bonus depreciation. These changes use the automatic consent procedures of Rev. Proc. 2018-31 and are generally made by filing an amended return or a Form 3115. Read More: Rev. Proc....
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OIRA Receives Proposed and Final Regulations under Section 168(k)
Posted on Jul 29, 2019
On July 25, 2019, the Department of Treasury and the Internal Revenue Service submitted final and proposed regulations under section 168(k) to OIRA (the Office of Information and Regulatory Affairs), which is part of the OMB (Office of Management and Budget). Amended by the Tax Cuts and Jobs Act, section 168(k) generally allows full expensing of certain depreciable property. The regulations are listed as not economically significant on OIRA’s website, and thus OIRA has a period of 45 days to review the regulations, although this period may be extended by an agreement between OMB and the...
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IRS Official States that Final Foreign Tax Credit Regulations Likely to Be Released by Fall and BEAT Regulations Likely to Be Released Before the End of the Year
Posted on Jul 17, 2019
At an event for the National Association for Business Economics on July 16, Peg O’Connor (deputy associate chief counsel (Operations and International Programs) at the IRS Office of the Associate Chief Counsel, International) stated that she expects final regulations addressing foreign tax credits to be released by the end of the summer and final regulations under section 59A (Base Erosion and Anti-Abuse Tax or BEAT) to be released this fall. The foreign tax credit regulation package is expected to also include proposed guidance that addresses issues raised by various commenters. The BEAT...
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IRS Provides Additional Q&A Guidance on Section 965
Posted on Jul 16, 2019
On July 16, 2019, the IRS released additional guidance in a Q&A format with respect to section 965. Enacted by the Tax Cuts and Jobs Act, section 965 generally imposes a transition tax on a US shareholder’s pro rata share of the accumulated earnings and profits of certain foreign corporations. The guidance includes information on making subsequent installment payments and filing transfer and consent agreements. View the Q&A: General Section 965 Questions and...
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IRS Releases Proposed Regulations Addressing the Excise Tax on Certain Educational Institutions Under Section 4968
Posted on Jun 28, 2019
On June 28, 2019, the IRS released proposed regulations under section 4968. Section 4968 was added to the Code by the Tax Cuts and Jobs Act and generally imposes an excise tax of 1.4% on the net investment income of applicable educational institutions that have at least 500 tuition-paying students (of which more than 50% are located in the United States) and that have assets of at least $500,000 per student. The proposed regulations provide guidance with respect to the definitions of various terms, such as “applicable educational institution” and “student.” The regulations also provide...
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Treasury Releases Final and Proposed GILTI Regulations and Temporary Section 245A Regulations
Posted on Jun 25, 2019
On June 14, Treasury and the IRS (the Service) released final and proposed regulations on the new global intangible low-taxed income provisions, or GILTI, that were introduced under the Tax Cuts and Jobs Act. Along with finalizing regulations related to determining a US shareholder’s GILTI inclusion and their pro rata share of a CFC’s subpart F income, the regulations also address the GILTI high tax exception as well as the treatment of domestic partnerships that own CFCs. Among other proposed items, the regulations offer taxpayers an election to exclude highly taxed income from GILTI under...
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Washington Court Games the Sales Tax Trade-In Exclusion
Posted on Jun 21, 2019
The Washington Court of Appeals upheld the Washington Department of Revenue’s denial of a sales tax exclusion for trade-ins of software and hardware. GameStop provides customers with a trade-in credit for software and hardware and allows customers to apply these credits towards future purchases of software and hardware. The Department denied GameStop’s exclusion for two reasons: the Department relied on its interpretation of its regulation to conclude that software and hardware are “not of a like kind,” and GameStop violated the separate statement requirement on trade-in credits used for...
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IRS Releases Proposed Regulations Addressing the FDII and GILTI Deduction under Section 250
Posted on Mar 4, 2019
On March 4, 2019, the IRS released proposed regulations under section 250. Section 250 generally allows a domestic corporation a deduction for its foreign-derived intangible income (FDII) and its global intangible low-taxed income (GILTI). The proposed regulations provide rules for determining the amount of the deduction, including guidance related to the provision’s taxable income limitation. Read the Proposed Regulations: REG-104464-18...
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Hearing on Proposed Regulations for Limitation on Deduction for Business Interest Expense – Treasury and IRS Hear Targeted, Industry-Specific Requests
Posted on Feb 28, 2019
On February 27, 2019, the Department of the Treasury (Treasury) and the Internal Revenue Service (IRS) held a hearing on the proposed regulations for the section 163(j) limitation on deduction for business interest expense (the Proposed Regulations), which were released on November 28, 2018. Nine witnesses, including Eversheds Sutherland Partner Wes Sheumaker, provided a variety of comments and recommendations on the Proposed Regulations, including the following: • The final regulations should give effect to the legislative history of the TCJA by clarifying that the electing real property...
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Hearing on Proposed Qualified Opportunity Zone Regulations – Requests for Greater Flexibility
Posted on Feb 15, 2019
On February 14, 2019, the Internal Revenue Service (IRS) and the Department of the Treasury (Treasury) held a hearing on the proposed regulations for the Qualified Opportunity Zone (QOZ) program (the Proposed Regulations), which were released on October 19, 2018. More than 20 witnesses provided comments and recommendations on a variety of topics, generally stressing a desire for greater flexibility under the Proposed Regulations. Suggestions included: Relaxing the proposed 50% gross income test – which requires that 50% of the gross income of an opportunity zone investor be derived from the...
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Georgia Bill Proposes Changes to Sales and Use Tax Reporting and Collection Rules
Posted on Feb 15, 2019
On February 14, 2019, the Georgia House Ways and Means Committee voted in favor of House Bill 182. Effective for January 1, 2020, the bill would amend O.C.G.A. § 48-8-2(8)(M.1) to lower the sales threshold on the requirement to collect or report sales and use tax from $250,000 to $100,000 and would repeal subsection (c.2) of O.C.G.A. § 48-8-30 in its entirety to eliminate the option to provide notification to the purchaser and state in lieu of collecting and remitting tax. O.C.G.A. § 48-8-2 currently requires out-of-state sellers to collect and remit sales tax if the seller obtains gross...
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OECD Proposal
Posted on Feb 14, 2019
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Podcast: New Jersey apportionment of GILTI
Posted on Feb 6, 2019
In this podcast, our state tax team discusses New Jersey guidance regarding the apportionment treatment of GILTI income.
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New Jersey Tax Court Rejects Alternative Apportionment Formula
Posted on Feb 1, 2019
The New Jersey Tax Court rejected the Division of Taxation’s application of a five-factor alternative apportionment formula as invalid rulemaking under New Jersey’s Administrative Procedures Act (APA). The Tax Court previously determined that an application of the statutory apportionment formula in effect prior to 2011 for companies without a “regular place of business” outside New Jersey did not fairly reflect the taxpayer’s in-state business activities and remanded the case to the Division so that other apportionment methods could be considered. The Division then proposed a modified...
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Legal Alert: We are not in Kansas anymore – OECD proposes way forward for digital tax solution
Posted on Feb 1, 2019
The OECD has again weighed in on the question of taxation of the digital economy, following on its original report as part of Action 1 of the BEPS initiative. On January 29, 2019, the OECD issued a policy note that sets out two “pillars” to evaluate proposals for a global digital tax solution. The first pillar focuses on the allocation of taxing rights. The second pillar focuses on anti-BEPS measures. The OECD’s approach is important as it continues to consider significant changes to historic concepts, and as multiple taxing jurisdictions, as well as the European Union, have introduced their...
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