Georgia Legislature Enacts Significant Income, Sales, and Property Tax Legislation
Posted on Apr 4, 2018
The Georgia legislative session concluded on March 29, 2018. In addition to two major bills relating to federal tax reform, Georgia enacted several other pieces of notable tax legislation. View the full Legal Alert.
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IRS Releases Notice on the Withholding Obligations of Non-publicly Traded Partnerships
Posted on Apr 4, 2018
On April 2, 2018, the IRS issued Notice 2018-29, which provides guidance related to withholding under Section 1446(f) with respect to the disposition of a partnership interest in a partnership that is not publicly traded. Read more here: Notice 2018-29
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IRS Releases Guidance on Section 965
Posted on Apr 4, 2018
On April 2, 2018, the IRS issued Notice 2018-26, which describes additional regulations to be promulgated under Section 965. The regulations will provide anti-avoidance rules under the authority granted by the statute, provide an exception to the treatment of a foreign corporation as a specified foreign corporation (SFC) in connection with the downward attribution of stock through a partnership in certain circumstances; provide a proration rule for foreign income taxes in determining a SFC’s post-1986 earnings and profits as of November 2, 2017; and set out related reporting and...
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IRS Releases Guidance on Section 163(j)
Posted on Apr 4, 2018
On April 2, 2018, the IRS issued Notice 2018-28, which provides guidance related to the interest deductibility limitation in Section 163(j). The Notice clarifies that Section 163(j) will treat taxpayers who file a consolidated return as a single taxpayer and that interest disallowed under the prior version of Section 163(j) may be carried forward and treated as business interest in taxable years beginning after December 31, 2017. Notably, the Notice did not address the applicability of Section 163(j) to controlled foreign corporations or to consolidated groups where one of the members of the...
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Transitional Guidance on Fines and Penalties Issued by IRS
Posted on Apr 3, 2018
Last week, the IRS issued Notice 2018-23 to assist government officials and taxpayers with complying with Sections 162(f) and 6050X of the Internal Revenue Code. The Tax Cuts and Jobs Act revised Section 162(f), which disallows deductions for fines and penalties, defined to exclude amounts paid as restitution or as reimbursement for investigations, or paid in suits where there is no government party involved. Notice 2018-23 provides details on how to satisfy the requirements for these exceptions. Additionally, the notice addresses the effective date of Section 6050X, a new section of the...
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New York State Budget Adopts Substantial Changes in Response to Federal TCJA
Posted on Apr 2, 2018
The New York Legislature passed its 2018-2019 Fiscal Year budget on March 30, 2018, which is expected to be signed into law by Governor Cuomo. The Legislature responded to the Tax Cuts and Jobs Act (TCJA) passed by the United States Congress late last year by excluding IRC § 965 repatriated income from New York taxable income. However, the final budget failed to address other TCJA provisions, such as the tax on global intangible low-taxed income (GILTI) and the interest expense limitation under IRC § 163(j). Thus, New York will conform to these federal tax changes. View the full Legal...
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Videocast: Implications of tax reform on income recognition
Posted on Apr 2, 2018
The changes made to the Internal Revenue Code by the Tax Cuts and Jobs Act (TCJA) included a number of modifications to the rules associated with income recognition. Although the TCJA codified certain taxpayer-favorable methods (i.e., the Deferral Method under Rev. Proc. 2004-34), the revised Section 451(b) likely will result in an acceleration of taxpayers’ historic recognition of income. In light of these changes and the changes, made under ASC 606 regarding revenue recognition for financial accounting purposes, taxpayers now more than ever should be reviewing and evaluating their...
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Videocast: State Tax Implications of Federal Tax Reform
Posted on Mar 28, 2018
The state and local tax (SALT) implications of federal tax reform are numerous, yet still often unclear. With states releasing new law and guidance about federal tax reform, taxpayers must stay abreast of this very dynamic area of law. In this videocast, Todd Lard and Todd Betor discuss the gating question to the SALT implications of federal tax reform—state conformity to the IRC—along with other SALT considerations pertaining to major general, domestic and international tax provisions included in the new tax law. View the videocast.
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President Trump Considers Subjecting the Treasury to OMB Oversight
Posted on Mar 28, 2018
President Trump is considering whether to grant the Office of Management and Budget (“OMB”) oversight over regulations issued by the Treasury Department. While the Treasury Department has been exempt from OMB review since the 1980s with respect to tax regulations, President Trump’s move would end that autonomy and add an additional layer of review to forthcoming Treasury regulations. Neomi Rao, head of the Office of Information and Regulatory Affairs within the OMB, remarked that such a move will delay forthcoming guidance related to the 2017 tax act, given the additional layer of review and...
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House Provides a Fix for the “Grain Glitch” with Passage of the Omnibus Spending Bill
Posted on Mar 23, 2018
Today, Congress approved an omnibus spending bill, a step toward averting a government shutdown that would otherwise occur this evening. The bill includes a fix to the so-called “grain glitch,” which addresses a technical error in the Tax Cuts and Jobs Act that allows farmers who sell grain to cooperatives to have a lower tax liability than those who sell to other purchasers. In exchange for rewriting the provision, Democrats in Congress negotiated an increase to the amount of the Low-Income Housing Tax Credit. The bill now heads to President Trump for his signature. Read more: What’s...
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Georgia passes legislation to provide deduction of GILTI from the state tax base
Posted on Mar 22, 2018
On March 21, 2018, the Georgia Legislature passed SB 328 (the Bill) to exclude IRC § 951A (GILTI ) from Georgia taxable income. The Bill treats GILTI as Subpart F income for purposes of the deduction under OCGA § 48-7-21(b)(8). View the full Legal Alert.
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“Phase Two” of Tax Cuts to Offer Permanence
Posted on Mar 19, 2018
Congressional Republicans and the White House are pushing to pass another tax package this year to make permanent the recently enacted benefits for families and small businesses. House Ways and Means Committee Chairman Kevin Brady stated that a second tax bill would provide a permanent extension to the individual tax cuts, the majority of which currently expire after 2025. These tax cuts were originally made temporary to comply with budget reconciliation rules allowing for passage by a simple majority in the Senate, but an additional bill would require a 60-vote majority in the Senate absent...
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Idaho Enacts Corporate Income Tax Changes to Take Advantage of the Federal Tax Reform Legislation
Posted on Mar 16, 2018
On March 12, 2018, Idaho’s governor signed into law H.B. 463 (the Bill), which provides a series of changes to Idaho’s income tax law in response to H.R. 1, popularly referred to as the Federal Tax Cuts and Jobs Act (the Act). The main changes to Idaho tax law include: (i) conformity, for tax years beginning after January 1, 2018, to the IRC as of January 1, 2018; and (ii) the add-back to federal taxable income of all amounts previously deducted on the corporation’s federal tax return under: (a) IRC § 245A (the 100% DRD for certain foreign-source dividend) and (b) IRC § 250 (containing the...
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Waiting for the Other Shoe to Drop: State and Local Tax Implications of Federal Tax Reform – International Tax Provisions
Posted on Mar 14, 2018
The state and local tax (SALT) impact of the recently enacted federal tax reform is still being assessed. Because of states’ broad conformity to the federal income tax laws, many of these changes will have an impact on taxpayers’ SALT liabilities. In their article for Bloomberg Tax, Eversheds Sutherland attorneys Jeff Friedman, Todd Betor and Michael Spencer focus on the SALT consequences stemming from the following international provisions of the Tax Cuts and Jobs Act: • a one-time “transition tax” on untaxed accumulated earnings and profits of controlled foreign corporations...
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Resignation of Treasury Official Expected to Result in Guidance Delays
Posted on Mar 12, 2018
Treasury Deputy Assistant Secretary of Tax Policy Dana Trier stepped down from his position on February 23. Trier’s role focused on developing guidance on various aspects of the new tax reform law, including the partnership and international tax provisions. Practitioners have expressed concern that his departure will result in delays in issuing regulations, which could result in taxpayers taking positions on their tax returns without guidance. His departure may also result in more non-binding “subregulatory guidance” through notices, announcements and press releases. Although Trier is gone,...
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