Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of July 8 – 12, 2019.
July 9, 2019: The IRS updated its frequently asked questions page for the Tax Cuts and Jobs Act (TCJA) changes to Charitable Contributions and Foreign Taxes Taken into Account in Determining Limitations on Allowance of Partner’s Share of Loss. The updated FAQ page addresses the extent a partner is allowed to take into account its distributive share of partnership losses, the effect of charitable contributions or foreign taxes on the basis limitation, and the new rules for determining losses subject to the basis limitation.
July 10, 2019: The IRS issued a news release noting that National Taxpayer Advocate Nina Olson had released a special report on the Earned Income Tax Credit (EITC), which makes recommendations designed to increase the participation rate of eligible taxpayers and reduce overclaims by ineligible taxpayers. Also, the Taxpayer Advocate Service (TAS) published a subway map that depicts a taxpayer’s “journey” through the tax system to help taxpayers and policymakers to better understand the tax administration process.
July 11, 2019: The IRS issued a notice in which it released corporate bond weighted average interest rates and the permissible range of interest rates used to calculate pension plan minimum funding for plan years beginning in July 2019. The IRS updated the yield curve and 24-month segment rates, the 30-year Treasury securities interest rates, and the minimum present value segment rates.
July 11, 2019: The IRS issued a T.D. in which it introduced a correction to regulations relating to organizations under common control for purposes of certain rules relating to pension, profit-sharing, and stock bonus plans. The IRS stated that the regulations were corrected on May 9, 1988, but that the corrections were never properly incorporated into the Code of Federal Regulations. The correction updates a cross reference to regulations under tax code Section 414 in Treasury Regulations Section 1.52-1.
July 11, 2019: The IRS issued a T.D. in which it introduced the removal of Treasury Regulations Section 1.451-5. The removed regulations dealt with advance payments for goods and long-term contracts. The IRS deemed those regulations to no longer be necessary after enactment of the TCJA. The regulations affect accrual method taxpayers who receive advance payments for goods, including those for inventoriable goods. Also, in the preamble to this T.D., the IRS stated that Tax code Section 451(c), enacted by the 2017 tax act, and its election to defer advance payments override the deferral method provided by Treas. Reg. Section 1.451-5.
July 12, 2019: The IRS issued a notice that stated that the continuity safe harbor for placing energy property in service may be tolled and extended in certain limited circumstances involving significant national security concerns. The continuity safe harbor for the energy credit and production tax credit allows a taxpayer to be deemed to satisfy the continuous construction test or the continuous efforts test based on the date the facility is placed in service. When a plan to construct energy property is delayed due to national security concerns involving the Department of Defense, the continuity safe harbor can be tolled and extended. In this notice, the IRS outlined the requirements for such action to happen and the IRS noted that on the date that the tolling period ends the continuity safe harbor resumes.
July 12, 2019: The IRS released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandums and Chief Counsel Advice).
Special thanks to Alex Ruff in our Chicago office for this week’s roundup.