Eversheds Sutherland Tax Reform Law Blog
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Videocast: Implications of tax reform on income recognition

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

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

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

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

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...
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“Phase Two” of Tax Cuts to Offer Permanence

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

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

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

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. Practioners 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, he...
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Treasury Considering Treatment of Foreign Taxes Under Transition Tax

Under the new Tax Act, U.S. shareholders are charged a one-time tax on deferred foreign earnings of their foreign subsidiaries; these earnings and profits are measured as of November 2 if the amount is greater than on December 31.  Taxpayers have brought to Treasury’s attention that the use of the November 2 date can result in an overstatement of earnings because foreign taxes generally do not accrue until year end. However, according to Gary Scanlon, from the Treasury’s Office of the International Tax Counsel, “Treasury is taking its time thinking through exceptions and ways to modify the...
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Treasury to Issue Regulations Limiting Exclusion to the New Carried Interest Holding Period to C Corporations

The legislation formerly known as the Tax Cuts and Jobs Act extended the section 1061 carried interest holding period from one year to three years. However, section 1061(c)(4) provided an exception for “any interest in a partnership directly or indirectly held by a corporation.” The reference to a corporation arguably applies to both S corporations and C corporations, which provides the opportunity for the use of S corporations to avoid the three year holding period. As a result, the recently released Notice 2018-18 provides that S corporations are not corporations for the purposes of...
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The Treasury Department Anticipates Releasing a Notice on IRC 163(j) in the Near Future

Krishna Vallabhaneni, Treasury deputy tax legislative counsel, recently stated that the Treasury Department plans on issuing a notice in the coming weeks to address some of the recent issues related to amended IRC 163(j) (interest expense deductions). Some of the specific issues the notice will address include the treatment of carryovers and limitations under the previous section 163(j), its application to partnerships, and whether the provision will be applied on a consolidated group basis. Read more: Interest Expense Deduction Notice Expected in Coming...
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EU Finance Ministers Debate the EU’s Response to the 2017 Tax Act

Finance ministers from key EU countries, including France, Germany and Italy, are questioning whether some of the provisions of the 2017 tax act are contrary to World Trade Organization (WTO) rules. The finance ministers are currently reviewing whether to file a complaint with the WTO out of concern that the tax act will spark a race to the bottom with respect to tax rates. EU finance ministers are also considering whether pushing forward with their own tax reform project—the creation of a common EU tax scheme –would address their concerns. Read more: EU Mulls Retaliation over Trump Tax...
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IRS Releases Revenue Procedure Limiting Changes to Annual Accounting Periods

The IRS has restricted the ability of taxpayers to make certain changes in accounting periods, through the issuance of Revenue Procedure 2018-17. The revenue procedure modifies Revenue Procedure 2002-39 and Revenue Procedure 2006-45, which deal with approval for changes to annual accounting periods. The modification generally denies automatic approval for changes to tax years of specified foreign corporations that otherwise would have a tax year corresponding to calendar year 2017, in order to address issues related to section 965 (the transition tax on deferred foreign earnings). Read the...
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Eversheds Sutherland Releases Videocast on the Interest Deduction Limitation under Section 163(j)

Eversheds Sutherland (US) LLP recently released a videocast covering the broadly applicable limitation on the ability to deduct interest under Section 163(j), enacted as part of the recent tax act. This short video includes an overview of the limitation, the differences between the current and prior limitation, and the exceptions to the limitation. Listen to the video:  The Interest Deduction Limitation under Section...
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