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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Indiana Supreme Court Cites Business Purpose Requirement in Holding RV Dealership Liable for Uncollected Sales Tax
Posted on Jan 31, 2019
On December 5, 2018, the Indiana Supreme Court in a 3-2 split decision held that an RV dealership was liable for uncollected sales tax on RV sales even though it delivered the RVs to buyers at out-of-state locations. The RV dealership’s protocol for transferring possession of its RVs to customers depended on the customer’s state of residence. Customers from Indiana—or from one of the 40 states with reciprocal tax exemption agreements under Indiana Code section 6-2.5-5-39(c)—drove their RVs directly off the dealership lot and paid Indiana sales tax. Customers from the nine states without...
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Massachusetts ATB Finds that Indiana Utility Receipts Tax Not a Deductible Transaction Tax for Massachusetts Corporate Excise Tax
Posted on Jan 30, 2019
The Massachusetts Appellate Tax Board disallowed a deduction for Indiana utility receipts tax (URT) paid by a natural gas distribution operator with operations in Indiana. The deduction for the URT was disallowed, for purposes of computing Massachusetts net income for corporate excise tax, because the URT is not a deductible “transaction tax.” The Board found that while the URT may have some characteristics of a transaction tax, on balance the URT is more akin to the types of income and franchise taxes that must be added back to net income under the Massachusetts statute. Bay State Gas Co....
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Passthrough Regulations and Guidance Released
Posted on Jan 24, 2019
Final section 199A regulations and additional proposed rules concerning passthrough deductions were released on January 18. The final regulations concern the 20 percent business income deduction available to passthrough owners meeting certain income thresholds that was introduced under the Tax Cuts and Jobs Act (TCJA). Included in the final regulations are a technical definition of “net capital gain,” an expansion of the definition of “relevant passthrough entities” to include certain common trust funds, and retain, with a small adjustment, the technical definition of “trade or business.”...
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IRS Issues Final Transition Tax Regulations
Posted on Jan 17, 2019
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
Posted on Jan 3, 2019
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
Posted on Dec 24, 2018
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
Posted on Dec 21, 2018
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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