Eversheds Sutherland Tax Reform Law Blog
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GILTI Regulations Reviewed by OMB

The Office of Management and Budget (OMB) has completed its review of global intangible low-tax income (“GILTI”) proposed regulations. Section 951A, enacted by the Tax Cuts and Jobs Act, generally taxes income earned by controlled foreign corporations at a reduced rate. Read more: OMB Completes Review of Regs on GILTI  
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Draft of Tax Reform 2.0 Introduced in Congress

House of Ways and Means Committee Chair Kevin Brady recently highlighted the introduction of three new tax bills that together comprise the new tax reform package. The drafts of new tax legislation deal primarily with individuals, retirement savings, and small businesses. H.R. 6760, the Protecting Family and Small Business Tax Cuts Act of 2018, would extend the 20 percent deduction on certain pass-through businesses and make permanent tax provisions related to individuals including reduced rates and the cap on state and local tax deductions. H.R. 6757, the Family Savings Act of 2018, would...
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Tax Reform 2.0 to be Marked Up This Thursday

According to its Chairman Kevin Brady, the House Ways and Means Committee will consider and mark-up “Tax Reform 2.0” legislation this Thursday. Released early last week, the Tax Reform 2.0 package consists of three bills to make permanent the individual tax cuts, pass-through provision under Section 199A and state and local tax (SALT) deduction cap added by the Tax Cuts and Jobs Act. The framework provides that the Tax Reform 2.0 is about “locking in tax cuts for middle-class families and small businesses, and changing the culture in Washington so we continuously improve our tax code and...
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Legal Alert: Real estate unlocked: Opportunity zones offer tax incentives to investors

As part of the Tax Cuts and Jobs Act of 2017, Congress added new rules to the Internal Revenue Code intended to promote investments in low-income communities designated as “qualified opportunity zones.” Deferral of tax on gains reinvested in Opportunity Funds and reduction or elimination of tax on such investments held for extended periods are the OZ Program’s carrots. Qualifying real estate development/redevelopment projects could be especially attractive opportunities under the program. While regulations are needed to answer some questions, early investors stand to reap the greatest...
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Comments on Sections 162 and 6050X Requested by IRS

The IRS has invited the public to comment on transitional guidance for the new reporting requirements under section 162(f) and new section 6050X, which was added by the Tax Cuts and Jobs Act, with respect to fines, penalties and other amounts. The comment period is open through November 5, 2018. Read the Notice here: Notice 2018-19172 Read more here: IRS Seeks Comment On Planned Biz Fine and Penalty...
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Videocast: State tax considerations of IRC § 965

In this Bottom Line videocast, Eversheds Sutherland attorneys Aaron Payne and Todd Betor discuss the state tax consequences and considerations of IRC § 965. This videocast includes: A federal income tax overview of IRC § 965 SALT considerations of IRC § 965 Specific state responses...
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IRS Releases Proposed Regulations Addressing Purported Charitable Contributions in Exchange for State and Local Tax Credits

On August 23, 2018, the IRS released proposed regulations under section 170, which allows deductions for certain charitable contributions. The regulations are in response to plans by some states to circumvent the $10,000 deduction limitation for state and local taxes imposed by the Tax Cuts and Jobs Act by offering tax credits for contributions to certain government programs. The proposed regulations generally deny a deduction for such contributions. Read more: REG-112176-18; Treasury Issues Crackdown on State and Local Tax...
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Proposed GILTI Tax Regulations are Currently Under Review by the OMB

According to the Office of Budget and Management (OMB) website, the proposed regulations on section 951A were received on August 22, 2018 and are currently under review.  Section 951A, a provision added by the Tax Cuts and Jobs Act, addresses the inclusion of global intangible low-taxed income by United States shareholders. Notice on OMB Website: Pending EO 12866 Regulatory Review
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Section 168(k) Administrative Solutions Possible for QIP Error; Partnership Remedial Allocations

On August 16, the Senate Finance Committee sent a letter to Treasury clarifying the drafting error in the Tax Cuts and Jobs Act that failed to make qualified improvement property (QIP) eligible for 100% bonus depreciation under section 168(k). Ellen Martin, a tax policy adviser in the Treasury Office of Tax Legislative Counsel, commented that the letter was welcome but may not be enough for an administrative solution. Martin explained that the limited QIP discussion in the proposed regulations is due to the fact that the IRS and Treasury are still weighing the options of what can be done,...
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IRS Releases Preliminary Guidance Clarifying Section 162(m) Deduction Limitations

The IRS released Notice 2018-68, which provides preliminary guidance on section 162(m). As amended by the Tax Cuts and Jobs Act, section 162(m) disallows the deduction for performance-based executive compensation and expands the definition of “covered employees” for the $1 million deduction limitation. The Notice provides that “covered employees” include the chief executive officer and chief financial officer and the three highest-compensated employees apart from these two positions. Additionally, the Notice confirms that material modifications to an agreement, such as an increase in...
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Presentation by Proposed Section 168(k) Regulations Team Provides Insight Into Significant Policy Decisions

On August 21, 2018, the Federal Bar Association hosted at Eversheds Sutherland’s Washington, D.C. office, a panel discussion with the team of IRS and Treasury professionals who drafted the proposed regulations for section 168(k).  Kathy Reed and Betsy Binder of the IRS Office of Chief Counsel were joined by Ellen Martin of the Department of the Treasury, as well as Barbara Young, Vice President of Global Tax Accounting and Compliance at Marriott International, Inc., and Eversheds Sutherland partners Ellen McElroy, Brad Seltzer, and Wes Sheumaker.  In a lively discussion, the government...
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IRS Releases Interim Guidance for Unrelated Business Taxable Income

The IRS released Notice 2018-67, which provides interim guidance addressing section 512(a)(6). Section 512(a)(6), added by the Tax Cuts and Jobs Act, requires a taxpayer to calculate its unrelated business taxable income separately for each unrelated trade or business in which the taxpayer is engaged. In determining whether a taxpayer has more than one trade or business, the Notice provides that a taxpayer may use a “reasonable, good-faith interpretation” of sections 511 through 514 of the of the Internal Revenue Code. Such an interpretation includes the use of North American Industry...
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Senate Finance Committee Provides Congressional Intent Behind TCJA Concepts

The Senate Finance Committee Republicans sent a letter to Treasury asking that its guidance on provisions of the Tax Cuts and Job Act reflect congressional intent. The letter specifically identified three errors to be corrected by technical correction legislation: the effective date of the net operating loss carryforwards and carrybacks should begin after December 31, 2017; qualified improvement property should have a 15-year modified accelerated cost recovery system (MACRS) recovery period and a 20-year alternative depreciation system (ADS) recovery period; and victims of sexual harassment...
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Federal Register Publishes Proposed Passthrough Deduction Regulations

On August 16, 2018, the Federal Register published the Treasury and the IRS’s proposed passthrough deduction regulations. The regulations provide guidance on section 199A, which grants up to a 20% deduction for certain business income with respect to individuals and passthrough entities. The publication in the Federal Register begins the comment period for the proposed regulations, and comments on the proposed regulations must be received by October 1, 2018. Read More: REG-107892-18
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Federal Register Publishes Proposed Transition Tax Regulations

On August 9, 2018, the Federal Register published the Treasury and the IRS’s proposed transition tax regulations. While the IRS had made an initial draft of the proposed regulations available for review, publication in the Federal Register begins the comment period for the proposed regulations. Comments on the proposed regulations must be received by October 9, 2018. Read More: Federal Register, Guidance Regarding the Transition Tax Under Section 965 and Related Provisions
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