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Treasury and the IRS Release Proposed and Final Regulations under Section 245A(e) and 267A

On April 7th, the Department of Treasury and the Internal Revenue Service released final and proposed regulations regarding hybrid arrangements under sections 245A(e) and 267A. Section 245A(e) generally limits the participation exemption deduction under section 245A or causes a dividend received by a controlled foreign corporation (CFC) to be included in subpart F income if a dividend...

CARES Act Amends TCJA Provisions

On March 27, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act. While the Act is primarily focused on the coronavirus epidemic, the Act made a few significant changes to provisions enacted by the Tax Cuts and Jobs Act (TCJA). The Act: • Allows net operating losses (NOLs) arising in 2018, 2019, or 2020 to be carried back five years and exempts NOLs from the...

OMB Completes its Review of Proposed Regulations under Section 163(j)

The Office of Management and Budget (OMB) has completed its review of proposed regulations under section 163(j). Section 163(j) generally limits a taxpayer’s interest deduction to the sum of its business interest income, floor plan financing interest, and 30% of its adjusted taxable income. The IRS had previously stated that the proposed section 163(j) regulations would likely be...

OIRA Completes Its Review of Final 163(j) Regulations

On January 31, the Office of Management and Budget (OMB) completed its review of final regulations under section 163(j). Section 163(j) generally limits a taxpayer’s interest deduction to the sum of its business interest income, floor plan financing interest, and 30% of its adjusted taxable income. The IRS had previously stated that the final regulations would likely be released along...

IRS to Consider Relief from Double Taxation Related to Transition Tax

On January 17, the IRS announced that it was aware of certain circumstances under which a taxpayer may be subject to double taxation as a result of the so-called transition tax under section 965. For example, where a corporation paid an unusual dividend for business reasons, double taxation may result if the same E&P of the foreign corporation are taxed both as dividends and under...

Treasury and IRS Issue Final Regulations on Investing in Qualified Opportunity Funds

On December 19, Treasury and the IRS released final regulations regarding investments in opportunity zones under section 1400Z-2. Opportunity zones were created by the Tax Cuts and Jobs Act and allow tax benefits for investments in low-income communities, through what are termed qualified opportunity funds (“QOF”). The final regulations provide guidance on the ability of taxpayers to...

OMB Begins Review of Final Section 163(j) Regulations

The Office of Management and Budget (OMB) received final regulations under section 163(j) on December 17. Section 163(j) generally limits a taxpayer’s interest deduction to the sum of its business interest income, floor plan financing interest, and 30% of its adjusted taxable income. While the OMB website does not state whether the regulations are subject to expedited review, IRS...

Treasury and IRS Release Final and Proposed FTC Regulations

On December 2, the Treasury and the IRS released final and proposed regulations with respect to the determination of the foreign tax credit relating to changes made to applicable law by the Tax Cuts and Jobs Act. The regulation package addresses the allocation and apportionment of deductions, foreign tax redeterminations, and the treatment of overall foreign losses, among other items....

Treasury and IRS Release Final and Proposed BEAT Regulations

On December 2, the Treasury and the IRS released final and proposed regulations under section 59A. Section 59A imposes a base erosion and anti-abuse tax (or BEAT), which generally operates as a minimum tax on income without regard to certain deductible payments made to foreign related parties. The final regulations implement BEAT generally, and the proposed regulations provide guidance...

Bill to Correct Qualified Improvement Property Glitch Fails to Gain Traction in the House

On Nov. 20, the House of Representatives failed to approve a motion that would have attached the Restoring Investment in Improvement Act (H.R. 1869) to the Workplace Violence Prevention for Health Care and Social Service Workers Act (H.R. 1309). H.R. 1869 would correct a drafting error in the Tax Cuts and Jobs Act changes to section 168 that prevents qualified improvement property from...

IRS LB&I Division Announces Section 965 Compliance Campaign

On November 4, the IRS Large Business and International Division (LB&I) announced a new compliance campaign directed at promoting compliance with section 965. Section 965, enacted by the Tax Cuts and Jobs Act, generally imposes a transition tax on a US shareholder’s pro rata share of the accumulated earnings and profits of certain foreign corporations. The LB&I campaign will...

IRS Releases Final Regulations under Section 6050Y

The IRS has issued final regulations under section 6050Y, which was added by the TCJA. Generally, section 6050Y requires information reporting with respect to certain life insurance contract transactions, such as payments of reportable death benefits. The final regulations detail the reporting requirements, such as the manner of reporting and the required timing of such reporting....

Proposed Regulations and New Revenue Procedure Address the Repeal of Section 958(b)(4)

Treasury and the IRS have released proposed regulations and a revenue procedure addressing the repeal of section 958(b)(4). Prior to its repeal by the Tax Cuts and Jobs Act, section 958(b)(4) prevented downward attribution from a foreign person for purposes of determining whether a foreign entity was a controlled foreign corporation under section 957.  The proposed regulations address...

IRS Provides Final Guidance on Rental Real Estate Safe Harbor under Section 199A

The IRS recently released Rev. Proc. 2019-38, which provides a safe harbor for treating a rental real estate enterprise as a single trade or business for purposes of section 199A. Section 199A generally allows a deduction of up to 20% of the taxpayer’s qualified business income from each of its qualified trades or businesses. The safe harbor had originally been proposed by the IRS in...

OIRA Receives Proposed and Final BEAT Regulations

The Office of Information and Regulatory Affairs (OIRA) has received both proposed and final regulations related to the base erosion and anti-abuse tax (BEAT) under section 59A. Section 59A generally operates as a minimum tax on income without regard to certain deductible payments made to foreign related parties. The proposed and final regulations are not deemed to be economically...


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