Eversheds Sutherland Tax Reform Law Blog
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Legal Alert: INXS? IRS Issues Proposed Regulations under Section 163(j)

On November 26, 2018, the Department of the Treasury (Treasury) and the Internal Revenue Service (IRS) issued proposed regulations (Proposed Regulations) under section 163(j) of the Internal Revenue Code of 1986, as amended (the Code). The Tax Cuts and Jobs Act (the TCJA) amended “old” section 163(j) with an entirely new section 163(j) which operates to limit the ability of taxpayers to deduct business interest expense. In contrast to “old” section 163(j), new section 163(j) applies to all taxpayers and all interest expense deductions. Read the full legal alert...
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Legal Alert: House Bill Proposes Tax Credit Extensions for Renewable Energy, Biodiesel and Alternative Fuels and other Energy Tax Provisions

On November 26, the House of Representatives released a tax bill (Extenders Bill) that, if enacted, would extend certain tax credits for the renewable energy and alternative fuels industries and would make other changes relevant to the energy sector. The Extenders Bill provisions include:  view full legal alert...
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Prospects for Year-End Tax Legislation Dim

Democratic members of the Senate Finance Committee, including Benjamin Cardin and ranking minority member Ron Wyden, have expressed doubt that the Retirement, Savings and Other Tax Relief Act of 2018 will pass this year.  While the bill includes provisions for the retroactive application of tax extenders through 2018, several technical corrections to the Tax Cuts and Jobs Act, and clarification of deemed repatriation overpayments (via a manager’s amendment), the size and contents of the package have been met with opposition from both parties in the House and Senate.  The House’s initial...
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OIRA Receives Foreign Partner Sales Regulations

On December 4th the Office of Information and Regulatory Affairs (OIRA) received regulations pertaining to the treatment of foreign partners’ gains on the sale of a U.S. partnership.  The regulations will provide guidance on section 864(c)(8), enacted by the Tax Cuts and Jobs Act, which treats gain from the sale of an interest in a partnership engaged in the conduct of a U.S. trade or business as effectively connected with the conduct of that business, overriding the Tax Court’s decision in Grecian Magnesite Mining.  The regulations are anticipated to address treatment of partial sales of...
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IRS Releases Proposed Foreign Tax Credit Regulations

On November 28, the IRS released proposed regulations (REG-105600-18) concerning the treatment of foreign tax credits and related issues taking into account the changes made by under the Tax Cuts and Jobs Act (TCJA).  Foreign tax provisions under the TCJA modified the method for calculating taxable income for purposes of the foreign tax credit limitation; added two additional foreign tax credit limitation categories, for amounts includible under the new Global Intangible Low-Taxed Income (GILTI) provisions of the TCJA and foreign branch income; and repealed the pooling concept for computing...
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House Republicans Release Tax Package

House Republicans released a 297 page tax bill on the evening of November 26, with the possibility of voting on the proposed bill as soon as this week. The legislation includes a number of “extenders,” which would renew certain tax provisions set to expire; tax breaks for smaller businesses; and technical corrections to the Tax Cuts and Jobs Act (TCJA) passed in 2017. The five technical corrections included in the legislation would address legal expenses incurred by sexual harassment victims; provide guidance on the effective date of net operating loss provision modifications; address the...
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IRS Releases Business Interest Expense Proposed Regulations

The IRS has released proposed regulations (REG-106089-18) concerning the business interest expense deduction limits applied to certain taxpayers. As amended by the Tax Cuts and Jobs Act (TCJA), section 163(j) generally places a limit on the amount of deductible business interest expenses in a current taxable year. The proposed regulations, released on November 26, provide rules for calculating the business interest expense limitations in international, partnership, and consolidated group contexts, among other items. The proposed regulations further provide that certain trades and businesses,...
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OIRA Receives Section 267A Regulations for Review

The IRS on November 13th submitted its proposed section 267A anti-hybrid regulations to the Office of Information and Regulatory Affairs for expedited review. Section 267A of the Tax Cuts and Jobs Act, eliminates deductions for any “disqualified related party amount” paid or accrued through a related hybrid entity or transaction. The regulations are expected to address such issues as conduit arrangements, multiple tax residences, structured transactions, and payments subject to a preferential tax regime or participation exemption system. Read more: Proposed Regulations on Hybrid Mismatches...
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Single Entity Can Apply 199A De Minimis Rule Multiple Times, According to IRS Official

Speaking at the American Institute of CPAs Fall Tax Division Meeting in Washington, D.C. on November 14, IRS associate chief counsel Holly Porter stated that the section 199A de minimis test applied to identify specified service businesses could apply multiple times for the same entity if separate businesses are being operated.  Enacted by the Tax Cuts and Jobs Act (TCJA), section 199A allows for a 20 percent deduction for certain passthrough business owners.  Porter explained that one passthrough could maintain separate records for each business within the entity and apply the de minimis...
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Eversheds Sutherland Seattle CPE Day – Navigating The Changing World of Tax – Day 2, November 7, 2018

Please view our presentations from day 2 of our Seattle CPE Day on federal and international tax planning. Hard Knock Life: The New Worldwide Territoriality and the Continuing Significance of the Foreign Tax Credit in the US – Speakers, Randy Buchanan and Robb Chase On to the Next One: The Increasing Importance of Destination in Tax Regimes – Speakers, Michele Borens, Randy Buchanan and Daniel Nicholas Encore: Marketplace Collection – All Things Marketplace Plus the Kitchen Sink – Speaker, Michele...
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Eversheds Sutherland Seattle CPE Day – Navigating The Changing World of Tax – Day 1, November 6, 2018

Please view our presentations from our Seattle CPE Day on federal and international tax planning. 99 Problems: Planning in a Time of Tax Uncertainty – Speakers, Robb Chase, Randy Buchanan, Mary Monahan and Stefanie Wood Empire State of Mind: International M&A Post Tax Reform – Speakers, Daniel Nicholas and Jed Rogers Can’t Knock the Hustle: The Implications of International Reforms for Audit and Controversy – Speakers, Robb Chase, Randy Buchanan and Mary Monahan Dirt Off Your Shoulder: Addressing Ethics in a Time of Uncertainty – Speakers, Mary Monahan and Daniel...
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Eversheds Sutherland Year-End Tax Seminar – Navigating the Changing World of Tax, November 14, 2018, Philadelphia, PA

Please view our presentations from Eversheds Sutherland’s year-end tax seminar on federal and international tax planning. 99 Problems: Addressing Risk in a Time of Tax  Uncertainty – Speakers, Ellen McElroy, Karl Zeswitz and Michael Resnick Can’t Knock the Hustle: The Implications of International Reforms for Audit and Controversy – Speakers, Mary Monahan and Robb Chase Holy Grail:  Section 199A and Opportunity Zones – Speakers, Jamie Null and Karl Zeswitz Empire State of Mind: International M&A Post Tax Reform – Speakers, Taylor Kiessig and Jed Rogers Hard...
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IRS to Consider Changing Section 199A Aggregation Rules Based on Comments

IRS official Benjamin Weaver stated that the IRS is open to changing the aggregation rules set forth in the proposed section 199A pass-through deduction regulations since they are not “statutorily derived.” Weaver stated that the IRS has received numerous comments on the proposed regulations, particularly on the requirement that attributes of multiple businesses be aggregated at the individual level rather than the entity level. Weaver did not confirm that the IRS and Treasury would definitely revise the proposed regulations but stated that it will be “an area of focus” as they finalized the...
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IRS Releases Priority Guidance Plan for 2018-2019

On November 8, the IRS and Treasury Department released their priority guidance plan (PGP) for 2018-2019, which includes a number of projects concerning the implementation of the Tax Cuts and Jobs Act. Planned projects include finalizing regulations under sections 199A (the 20% deduction for qualifying business income) and 951A (global intangible low-taxed income) and issuing regulations for section 163(j) (the interest deduction limitation); sections 959 and 961 (previously taxed earnings and profits); and sections 901, 960, and 78 (foreign tax credits). In total, the PGP includes 239...
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BEAT Regulations submitted to OMB

The IRS has submitted its proposed base erosion and anti-abuse tax (BEAT) regulations to the U.S. Office of Management and Budget for review.  Under section 59A of the Tax Cuts and Jobs Act (TCJA), the BEAT is an alternative minimum tax on income with deductions for payments between U.S. corporations and their foreign affiliates added back, which is designed to limit shifting of corporate income overseas through intangible property transfers.  The regulations are expected to provide guidance on certain exclusions applicable to BEAT calculations, including the cost of goods sold exception and...
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