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IRS Releases Additional Guidance on Section 965

The Treasury and the IRS have published Notice 2018-78, containing additional guidance on the proposed regulations for Section 965, which were published on August 9, 2018. The Notice provides that the final regulations (i) will not require taxpayers to make a binding basis election until at least 90 days after finalization of the proposed regulations; (ii) will permit all members of...

Proposed GILTI Regulations Released

The IRS has released proposed regulations on global intangible low-tax income (GILTI) under section 951A, a provision added by the Tax Cuts and Jobs Act.  The proposed regulations set forth rules for calculating the GILTI inclusion and new reporting requirements, but do not address foreign tax credit rules, which will be addressed separately in the future. Public comments on the...

Tax Reform 2.0 Approved by House Ways and Means Committee

The House Ways and Means Committee approved the Tax Reform 2.0 package consisting of three bills. This overhaul package would make permanent the TCJA’s reduced rates for individuals along with several other provisions, including the $10,000 cap on the state and local tax (SALT) deduction, and the 20% deduction on certain pass-through business income.  A proposed amendment to repeal the...

IRS Releases Draft Forms for Transition Tax and BEAT Reporting

The IRS released draft forms for reporting a taxpayer’s section 965 transition tax and section 59A base erosion and anti-abuse tax liabilities. The forms, titled Form 965 (“Inclusion of Deferred Foreign Income Upon Transition to Participation Exemption System”) and Form 8991 (“Tax on Base Erosion Payments of Taxpayers With Substantial Gross Receipts”), respectively, can be found on the...

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...

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....

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...

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...

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...

Proposed Pass-Through Deduction Regulations Released

The IRS has released proposed regulations on section 199A, a provision added by the Tax Cuts and Jobs Act that provides a deduction for certain qualified business income with respect to individuals and pass-through entities. Read more: IRS issues proposed regulations on new 20 percent deduction for passthrough businesses;...

Tax Law Discourages U.S. Investment and Leaves Taxpayers in the Dark, According to New Report from Senate Finance Democrats

A recent report released by the Senate Finance Committee ranking member Ron Wyden asserts that the new tax legislation has resulted in “more complexity, loopholes and incentives to ship jobs overseas.” According to the report, the global intangible low taxed income (“GILTI”) provisions create a new web of complexity and leave taxpayers in the dark regarding future investment decisions....

Tax Reform 2.0 Not Expected to Address International Provisions

According to Republican Congressman Carlos Curbelo, tax reform 2.0 will not address international tax provisions, such as BEAT or GILTI.  Instead, the next round of tax legislation is projected to focus on making the individual provisions permanent.  The excluded provisions are expected to be addressed in a future, separate technical corrections bill.  Curbelo also noted that the draft...

New Rev. Proc. Provides that Citrus Replanting Costs Not Included in Automatic Accounting Method Changes

Released Tuesday, Rev. Proc. 2018-35 provides that the new automatic change procedures under Rev. Proc. 2018-31 do not apply section 263A to replanting costs for damaged or lost citrus plants. Section 263A generally requires taxpayers to include the costs of certain property produced or acquired for resale to be included in inventory costs. However, under section 263A(d)(2)(A) as...

Potential Phase Two of Tax Legislation Focuses on Making Individual Tax Changes Permanent

House Republicans intend to roll out a second package of tax cuts this summer. The focus of the new bill is to make the individual tax cuts permanent, but it may also include other changes, such as cutting capital gains taxes and including incentives to boost business innovation. House Ways and Means Committee Chairman Kevin Brady anticipates that the new bill would be approved in the...

IRS Releases Guidance on Section 965

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...