Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of December 9 – 13, 2019.

December 10, 2019: The IRS issued a notice providing that the requirement to report partners’ shares of partnership capital on the tax basis method will not be effective for 2019 for partnership taxable years beginning in calendar 2019. Instead, the requirements will be effective beginning in 2020 (for partnership taxable years that begin on or after January 1, 2020). The notice also defines a partner’s share of “net unrecognized Section 704(c) gain or loss” for purposes of partnership reporting.

December 10, 2019: The Joint Committee on Taxation released a report detailing proposed provisions of the “Restoring Tax Fairness for States and Localities Act.” The bill would increase the maximum state and local tax deduction that married couples can claim in 2019 and would eliminate the limitations on the maximum state and local tax deduction in 2020 and 2021. The bill would also increase the top marginal individual income tax rate under temporary rules.

December 11, 2019: The IRS issued a notice providing guidance on the corporate bond monthly yield curve, the corresponding spot segment rates used under section 417(e)(3), and the 24-month average segment rates under section 430(h)(2). The notice also provides guidance regarding both the interest rate on 30-year Treasury securities under section 417(e)(3) as well as the 30-year Treasury weighted average rate under section 431(c)(6).

December 13, 2019: The IRS issued proposed regulations that provide amendments to regulations under sections 162, 164 and 170 of the IRC. The proposed regulations reflect current law regarding the application of section 162 to a taxpayer that makes a payment or transfer to an entity described in section 170(c) for a business purpose; the regulations also provide safe harbors under section 162 to provide certainty for such payments. The regulations also provide a safe harbor under section 164 for payments made to an entity described in section 170(c) by individuals who itemize deductions and receive or expect to receive a state or local tax credit in return. The proposed regulations are scheduled to be published in the Federal Register on December 17, 2019. Public comments regarding the contemplated rules must be received by January 31, 2020.

December 13, 2019: The IRS released a revenue procedure clarifying that all plan amendments that both relate to a plan’s hardship distribution provisions and that are effective no later than January 1, 2020, shall be treated as integral to the required amendments under newly-updated sections 401(k) and 401(m). The revenue procedure also extended the deadline for pre-approved plans to adopt an interim amendment relating to those regulations.

December 13, 2019: The IRS released a revenue ruling providing that the base period T-bill rate for the period ending September 30, 2019, is 2.32%. Section 995(f)(1) of the IRC provides that a shareholder of a domestic international sales corporation (a “DISC”) shall pay annual interest equal to the product of the shareholder’s DISC-related deferred tax liability, as defined in section 995(f)(2).

December 13, 2019: The IRS issued a statistics of income report regarding corporation income tax returns line item estimates in 2015. The report contains estimates of frequencies of taxpayer entries and estimates of monetary amounts recorded on various lines and schedules of corporate tax returns.

December 13, 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 Jenni Saperstein in our Chicago office for this week’s roundup.