Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of September 14, 2020 – September 18, 2020. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here.
September 14, 2020: The IRS published final regulations providing guidance on the limitation on the deduction for business interest expense after amendment of the Internal Revenue Code (Code) by the Tax Cuts and Jobs Act (TCJA) and the Coronavirus Aid, Relief and Economic Security Act (CARES Act). The regulations provide guidance to taxpayers on how to calculate the limitation, what constitutes interest for purposes of the limitation, which taxpayers and trades or businesses are subject to the limitation and how the limitation applies in consolidated group, partnership, international and other contexts. The final regulations vary slightly from the document released on IRS.gov on July 28, 2020.
September 14, 2020: The IRS published a criminal tax bulletin concerning recent case law involving the Criminal Tax Division.
September 15, 2020: The IRS published Rev. Rul. 2020-20 that provides various prescribed rates for federal income tax purposes for October 2020, including: (1) the applicable federal rates (AFR) under section 1274(d); (2) the adjusted applicable federal rates (adjusted AFR) under section 1288(b); (3) the adjusted federal long-term rate and the long-term tax-exempt rate under section 382(f); (4) the appropriate percentages for determining the low-income housing credit under Section 42(b)(1); and (5) the federal rate for determining the present value of an annuity, an interest for life or for a term of years or a remainder or a reversionary interest under section 7520.
September 15, 2020: The IRS published a practice unit covering Last In-First Out (LIFO) inventories under various LIFO methods.
September 15, 2020: The IRS released for future publication in the Federal Register final regulations concerning the definition of an eligible terminated S corporation and rules relating to distributions of money by such a corporation after the post-termination transition period. The regulation package also amends current regulations to extend the treatment of distributions of money during the post-termination transition period to all shareholders of the corporation and clarifies the allocation of current earnings and profits to distributions of money and other property. The final regulations affect C corporations that were formerly S corporations and the shareholders of such corporations.
September 16, 2020: The IRS published a memorandum providing flexibility for taxpayers who are temporarily unable to meet the payment terms on accepted offers due to the economic impact of COVID-19. The procedures will expire December 31, 2020, unless extended.
September 17, 2020: The IRS published a practice unit providing an overview of the Overall Foreign Loss (OFL), Separate Limitation Loss (SLL) and Overall Domestic Loss (ODL) rules, as well as related examples.
September 17, 2020: The IRS announced it intends to amend the regulations under section 987 to defer the applicability date of certain final regulations under section 987 and certain related final regulations by one additional year.
September 18, 2020: The IRS published final regulations concerning the rehabilitation credit, including rules to coordinate the new 5-year period over which the credit may be claimed with other special rules for investment credit property. The final regulations affect taxpayers that claim the rehabilitation credit and are effective on September 18, 2020.
September 18, 2020: The IRS published corrections to a notice of proposed rulemaking (REG-132766-18) that was published in the Federal Register on August 5, 2020. The proposed regulations are to implement legislative changes to sections 263A, 448, 460 and 471 that simplify the application of those tax accounting provisions for certain businesses having average annual gross receipts that do not exceed $25,000,000, adjusted for inflation.
September 18, 2020: The IRS published a notice and request soliciting comments concerning the Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs and related forms. Comments should be received on or before November 17, 2020.
September 18, 2020: The IRS released for future publication in the Federal Register final regulations concerning the excise tax applicable to the net investment income of certain private colleges and universities, as provided by section 4968. The regulations affect certain private colleges and universities.
September 18, 2020: The IRS released Internal Revenue Bulletin 2020-39, dated September 21, 2020, containing the following highlights: (1) Rev. Rul. 2020-18 (Administrative); (2) Notice 2020-69 (Income Tax); and (3) TD 9906 (Income Tax).
September 18, 2020: The IRS released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandums and Chief Counsel Advice).
Special thanks to Robbie Alipour in our Chicago office for this week’s roundup.