Proposed Regulations and New Revenue Procedure Address the Repeal of Section 958(b)(4)
Posted on Oct 1, 2019
Treasury and the IRS have released proposed regulations and a revenue procedure addressing the repeal of section 958(b)(4). Prior to its repeal by the Tax Cuts and Jobs Act, section 958(b)(4) prevented downward attribution from a foreign person for purposes of determining whether a foreign entity was a controlled foreign corporation under section 957. The proposed regulations address the impact of the repeal on various other Code provisions, such as sections 267, 332, and 1297. The revenue procedure describes changes made with respect to filing requirements to Form 5471 and also provides...
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IRS Provides Final Guidance on Rental Real Estate Safe Harbor under Section 199A
Posted on Sep 26, 2019
The IRS recently released Rev. Proc. 2019-38, which provides a safe harbor for treating a rental real estate enterprise as a single trade or business for purposes of section 199A. Section 199A generally allows a deduction of up to 20% of the taxpayer’s qualified business income from each of its qualified trades or businesses. The safe harbor had originally been proposed by the IRS in Notice 2019-07. Read More: Rev. Proc. 2019-38, Notice...
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OIRA Receives Proposed and Final BEAT Regulations
Posted on Sep 18, 2019
The Office of Information and Regulatory Affairs (OIRA) has received both proposed and final regulations related to 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 proposed and final regulations are not deemed to be economically significant, meaning that OIRA will have 45 days to review the regulations. Read More: OIRA Begins Review of BEAT...
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IRS Releases Final Regulations under Section 168(k)
Posted on Sep 13, 2019
Today, Treasury and the IRS 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 address the requirements to qualify for the additional depreciation deduction and elections related to the deduction. Read the final regulations: TD 9874 Read the proposed regulations:...
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OIRA Completes Review of Second Set of Proposed Regulations under Section 168(k)
Posted on Sep 11, 2019
The Office of Information and Regulatory Affairs (OIRA) recently completed its review of a second set of proposed regulations under section 168(k). Amended by the Tax Cuts and Jobs Act, section 168(k) generally allows full expensing of certain depreciable property. OIRA has not released information as to the contents of the proposed regulations, and the release of this set of proposed regulations may be delayed since the first set of proposed regulations under section 168(k) has not yet been finalized. Read More: Second Batch of Proposed Depreciation Rules Clears Reg...
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IRS Releases Proposed Regulations under Section 451
Posted on Sep 5, 2019
The IRS has released proposed regulations under section 451(b) and (c), which were amended by the Tax Cuts and Jobs Act. Section 451(b) generally provides that a taxpayer must recognize income no later than when the taxpayer takes the income into account on its applicable financial statement, and section 451(c) provides rules regarding the timing of the recognition of advance payments. Read the Proposed Regulations: Proposed Section 451(b) Regulations; Proposed Section 451(c)...
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IRS Working to Address Double-Gain-Recognition Issue in Final GILTI Regulations and Temporary Section 245A Regulations
Posted on Sep 5, 2019
Speaking at an event on September 4, John Merrick, senior-level counsel to the IRS associate chief counsel (international), stated that the IRS is aware that the interaction between the anti-avoidance rules of section 245A (the participation exemption deduction) and section 951A (global intangible low-taxed income, GILTI) could result in double gain recognition for taxpayers and is working to correct this issue. Specifically, there is concern that a deduction could be denied for purposes of calculating the GILTI tested income of a controlled foreign corporation under the disqualified basis...
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Treasury and IRS Allow Domestic Partnerships and S Corporations to Apply Certain Proposed GILTI Regulations to Taxable Years Ending Before June 22, 2019
Posted on Aug 26, 2019
The Department of the Treasury (Treasury) and the IRS recently released Notice 2019-46. The notice allows a domestic partnership or S corporation to apply Prop. Treas. Reg. § 1.951A-5 to taxable years ending before June 22, 2019, so long as the domestic partnership or S corporation meets the notification and reporting requirements described in the notice. Prop. Treas. Reg. § 1.951A-5 addresses the treatment of global intangible low-taxed income (GILTI) inclusion amounts and adjustments to earnings and profits to account for tested losses. Read More: Notice...
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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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