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House Budget Would Extend Individual TJCA Provisions

On June 19, 2018, the House Budget Committee released a 10-year budget plan that, if passed, would provide a vehicle to extend the individual tax provisions enacted under the TJCA past their current expiration date in 2025 through the budget reconciliation process. To help reduce the cost of extending the cuts, the budget plan requires committees to submit legislation to reduce the...

Congressman States that the TCJA will not be Amended, Despite EU Criticism

Rep. Peter Roskam, a Republican member of the House Ways and Means Committee, stated at a conference that, despite criticism from EU officials, Congress does not intend to amend the Tax Cuts and Jobs Act (TJCA). Some EU officials have been particularly critical of the foreign-derived intangible income provision, arguing that the provision essentially acts as an export subsidy which...

The IRS Releases Additional Guidance on Penalties Related to the Transition Tax

The IRS announced that it will waive the estimated tax penalty for taxpayers subject to the transition tax under section 965 in certain instances, such as (1) for any taxpayer that improperly applied a 2017 overpayment to a 2018 estimated tax liability, and (2) for any individual that missed the April 18, 2018 deadline for making the first payment. Read more: IRS offers penalty, filing...

IRS to Crackdown on SALT Deduction Cap Workarounds

The IRS intends to issue regulations pertaining to states’ attempts to subvert the state and local tax deduction cap. The Tax Cuts and Jobs Act imposed a $10,000 ($5,000 for married individuals filing separately) limit on state and local tax deductions for federal income tax purposes. Certain states, including New York, New Jersey, and Connecticut, have enacted legislation to allow...

The Upcoming FAA Authorization May Not Contain Any Technical Corrections to the Tax Legislation

House Ways and Means Chairman Kevin Brady has indicated that the upcoming Federal Aviation Administration (“FAA”) reauthorization bill is unlikely to contain additional technical corrections to the 2017 tax bill, despite containing a tax title. Congress had previously passed, in the 2018 Consolidated Appropriations Act, a technical correction to fix a provision that encouraged farmers...

IRS Issues Guidance Related to Determining Built-in Gain or Loss under Section 382

Recently released Notice 2018-30 provides that the two safe harbor approaches in Notice 2003-65–related to recognizing built-in gain or loss–will be determined without regard to the bonus depreciation rule under section 168(k). Section 382 imposes limits of the amount of built-in losses that can offset future taxable income following ownership change. The notice states that...

IRS Releases Fact Sheet on Depreciation

The IRS recently released a factsheet that provides an overview of the changes to depreciation and expensing under the new tax law. The fact sheet addresses immediate expensing for section 179 property, first year bonus depreciation, limitations on luxury automobiles and personal use property, treatment of certain farm property, the applicable recovery period for real property, and the...

The OMB and Treasury Release Memo on OMB’s Oversight of Tax Regulations

The Office of Management of Budget (OMB) and the Department of Treasury recently issued a memo describing the framework for the OMB’s review of tax regulations. The memo provides that regulations will be subject to review if they 1) create a serious inconsistency or interfere with an action of another agency, 2) raise novel legal or policy issues, or  3) have an annual non-revenue...

IRS Releases Notice on the Withholding Obligations of Non-publicly Traded Partnerships

On April 2, 2018, the IRS issued Notice 2018-29, which provides guidance related to withholding under Section 1446(f) with respect to the disposition of a partnership interest in a partnership that is not publicly traded. Read more here: Notice 2018-29

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...

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...

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 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...

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...

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...


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