Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of June 24 – 28, 2019.

June 24, 2019: The IRS updated its frequently asked questions for Opportunity Zones page. In the updated FAQs, the IRS now poses, and answers in the affirmative, the question of whether a taxpayer can still make a valid deferral election based on an investment that was lower than the total tax code Section 1231 gain but realized within the 180-day period after the last day of the 2018 tax year under proposed regulations.

June 24, 2019: The IRS issued a technical correction to its final regulations Section 1.956-1 that acts to reduce the amount determined under tax code Section 956 with respect to certain domestic corporations. The correction updates a cross reference table in the instructions to Treas. Reg. Section 1.956-1 that had misidentified a subparagraph affected.

June 27, 2019: The IRS posted a page for General Section 965 Questions and Answers. In addition to discussing various frequently asked questions (FAQs) with regards to Section 965, the page also discusses filing transfer and consent agreements arising under Section 965(h) and Section 965(i).

June 28, 2019: The IRS issued a news release noting that it had issued proposed regulations concerning the new 1.4 percent excise tax on the net investment income of certain private colleges and universities provided for under section 4968.

June 28, 2019: The IRS issued corrections to its regulations concerning the recognition and deferral of Section 987 Gain or Loss (IRC §987) which will become effective on July 1, 2019. The corrections relate to combinations and separations of qualified business units (QBUs) subject to Section 987 and the recognition and deferral of foreign currency gain or loss with respect to a QBU subject to Section 987 in connection with certain QBU terminations and certain other transactions involving partnerships. Specifically, the corrections were made to Treas. Reg. Section 1.987-2 and Treas. Reg. Section 1.987-4 to properly identify regulation sections references. The substance of the regulations were not changed.

June 28, 2019: The IRS issued final regulations clarifying the employment tax treatment of partners in a partnership that owns a disregarded entity. The rules provide that if a partnership is the owner of an entity that is disregarded as an entity separate from its owner, the entity is not treated as a corporation for purposes of employing a partner of the partnership that owns the entity; instead, the entity is disregarded as an entity separate from the partnership for this purpose and is not the employer of any partner of the partnership that owns the entity. A partner of a partnership that owns an entity that is disregarded as an entity separate from its owner is subject to the same self-employment tax rules as a partner of a partnership that does not own an entity that is disregarded as an entity separate from its owner, according to the regulations.

June 28, 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.