IRS Releases Proposed Regulations Addressing the Excise Tax on Certain Educational Institutions Under Section 4968

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 guidance in determining an institution’s net investment income and the basis of its property.

Read the Proposed Regulations: REG-106877-18

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