Eversheds Sutherland Tax Reform Law Blog
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IRS Issues Final Transition Tax Regulations

On January 15, 2019, the IRS and Treasury released final regulations on the section 965 transition tax. The final regulations largely adopt the basic approach and the structure of the proposed regulations (REG-104226-18) issued on August 9, 2018 but with some changes, including modifications to the election to reallocate basis to reflect the offset of positive earnings with deficits under section 965(b) and the introduction of an exception for certain commodities used in an active business from treatment as a cash-equivalent asset that implicates the higher transition tax rate. Read More:...
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Discussion Draft of the “Tax Technical and Clerical Corrections Act” Released

Rep. Kevin Brady, former Chairman of the House Ways and Means Committee, issued a draft of technical changes to the Tax Cuts and Jobs Act (TCJA) on January 2, 2019, just prior to relinquishing the Chair to Rep. Richard Neal.  The dozens of proposed changes, written to implement Congressional intent and correct provisions in the TCJA, include restoration of the applicable recovery period for qualified improvement property for restaurants and retailers, clarifications to the qualified business income deduction, and clarification of issues with respect to both the interest deduction limitations...
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It’s Not the Eggnog – New Jersey Proposes to Specially Allocate GILTI Based on GDP

On December 21, the New Jersey Division of Taxation released Technical Bulletin TB-85, which addresses how the Division will expect taxpayers to calculate the amount of so-called global intangible low-taxed income (GILTI) and foreign derived intangible income (FDII) that are taxable for New Jersey corporation business tax (CBT) purposes. Background: GILTI and FDII under Federal Tax Law The Federal Tax Cuts and Jobs Act (TCJA) created a new category of income under Internal Revenue Code (IRC) section 951A, known as GILTI.  This provision imposes a tax on U.S. shareholders based on income from...
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IRS Releases Proposed Regulations Addressing Hybrid Arrangements

On December 20, the IRS released proposed regulations under sections 245A(e) and 267A. Section 245A allows a deduction for certain related party dividends, except in the case of certain hybrid dividends, and section 267A disallows deductions for certain amounts paid in a related-party hybrid transaction or to a related hybrid entity. The proposed regulations under section 267A clarify the application of the provision, and the guidance under section 245A(e) defines hybrid dividends and clarifies the interaction between the provision and foreign tax laws. Read the Proposed Regulations:...
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Legal Alert: BEAT, FATCA and Insurance—proposed regulations clarify the application of the BEAT and the treatment of insurance premiums under FATCA

On December 13, 2018, the Department of the Treasury (Treasury) and the Internal Revenue Service (IRS) issued two sets of proposed regulations of importance to insurance companies. One set was the long-awaited regulations under section 59A of the Internal Revenue Code of 1986, as amended (Code), commonly referred to as the base-erosion anti-abuse tax (BEAT). The other set of proposed regulations amended the Foreign Account Tax Compliance Act (FATCA) regulations that apply to sections 1441-1446 of the Code. Read the full legal alert...
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Legal Alert: The season of giving – proposed regulations ease FATCA reporting burdens

On December 13, 2018, proposed regulations (Proposed Regulations) were issued that reduce certain compliance obligations under Sections 1471-1474 (the Foreign Account Tax Compliance Act (FATCA)) of the Internal Revenue Code of 1986, as amended (Code) and Sections 1441-1446 of the Code. FATCA generally requires withholding 30% on certain US source payments made to foreign financial institutions (FFIs) unless the FFI has entered into an FFI agreement with the Internal Revenue Service (IRS) or the FFI is resident in a country that has an Intergovernmental Agreement (IGA) in force. Sections...
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Joint Committee on Taxation Releases Blue Book of TCJA

The General Explanation of Public Law 115-97, prepared by the staff of the Joint Committee on Taxation in consultation with the staffs of the House Committee on Ways and Means, the Senate Committee on Finance, and the Treasury Department’s Office of Tax Policy, was released this week. The explanation provides a discussion of the Tax Cuts and Jobs Act (TCJA) including a description of pre-TCJA provisions and an explanation of the new provisions. Read the General Explanation of Public Law...
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Legal Alert: And the BEAT goes on – proposed regulations clarify the application of the base-erosion and anti-abuse tax

On December 13, 2018, the Department of the Treasury (Treasury) and the Internal Revenue Service (IRS) issued proposed regulations under section 59A of the Internal Revenue Code of 1986, as amended, commonly referred to as the base-erosion and anti-abuse tax (BEAT). Read the full Legal Alert here.
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California Court of Appeal Affirms that Transactions Involving Out-of-State Title Transfer Are Subject to Local Use Tax, Not Local Sales Tax

The California Court of Appeal affirmed a trial court decision finding that transactions involving an Internet retailer headquartered in Brisbane, California, were subject to local use tax, rather than local sales tax, because title in the transactions at issue passed outside California. The court explained that when a retail seller delivers goods to a common carrier at an out-of-state warehouse for shipment to a customer in California, title will pass to the buyer at the time and place that the retailer delivers the goods to the carrier, absent an agreement to the contrary. City of Brisbane...
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OMB Receives Final and Proposed Section 199A Regulations

The Office of Management and Budget (OMB) received the proposed and final regulations regarding the new section 199A pass-through deduction regime on December 13 and 14.  The proposed regulations focus on regulated investment company-specific guidelines while the final regulations follow up on the proposed pass-through deduction rules released in August.  The regulations are not marked for expedited review; however, the government has indicated that it plans to release the final regulations before the end of the year so they will take effect for tax year 2018. Read More: OIRA Reviewing Final...
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IRS Releases Proposed BEAT Regulations

On December 13, the IRS released proposed regulations (REG-104259-18) concerning the base erosion and anti-abuse tax (BEAT) under section 59A. Section 59A generally operates as a minimum tax on income without regard to certain deductible payments made to foreign related parties. The new regulations clarify who is an “applicable taxpayer” under the provision, as well as provide further explanation regarding the BEAT calculation. Read the Proposed Regulations: REG-104259-18
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OIRA Receives Final Transition Tax Regulations for Review

On December 6, the Office of Information and Regulatory Affairs (OIRA) received final regulations under section 965, the so-called transition tax. OIRA will have 45 days to review the regulations, as they are not designated for expedited review. The Treasury Department has previously stated that the final regulations will provide additional detail regarding ordering rules for determining earnings and profits, but the final regulations may include other changes to the proposed regulations as well.  The final regulations are expected to be released by the end of the calendar year. Read More:...
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Legal Alert: IRS and Treasury Issue Final Regulations on Negative Adjustments under UNICAP

On November 19, 2018, the Internal Revenue Service (IRS) and the Treasury Department (Treasury) issued final regulations (T.D. 9843) that address taxpayers’ use of negative amounts in calculating additional costs for purposes of section 263A. Read the full legal alert here
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Legal Alert: Allocation, Apportionment and Attribution, oh my – Proposed Foreign Tax Credit Regulations Provide Critical Guidance

On November 28, 2018, the Department of the Treasury (Treasury) and the Internal Revenue Service (IRS) issued proposed regulations concerning foreign tax credit determinations and related issues (Proposed Regulations) to take into account changes to the Internal Revenue Code made by the Tax Cuts and Jobs Act (TCJA). The Proposed Regulations were highly anticipated because their application will significantly impact the practical cost to taxpayers of many provisions of the TCJA, most notably the new Global Intangible Low-Taxed Income (GILTI) provisions. Read the full legal alert...
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Legal Alert: INXS? IRS Issues Proposed Regulations under Section 163(j)

On November 26, 2018, the Department of the Treasury (Treasury) and the Internal Revenue Service (IRS) issued proposed regulations (Proposed Regulations) under section 163(j) of the Internal Revenue Code of 1986, as amended (the Code). The Tax Cuts and Jobs Act (the TCJA) amended “old” section 163(j) with an entirely new section 163(j) which operates to limit the ability of taxpayers to deduct business interest expense. In contrast to “old” section 163(j), new section 163(j) applies to all taxpayers and all interest expense deductions. Read the full legal alert...
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