Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of December 3 – 7, 2018:

December 4, 2018: The IRS issued a news release granting taxpayers an extra day, until Thursday, December 6, 2018, to file any return or pay any tax originally due on Wednesday, December 5, 2018, in light of the Executive Order closing all federal agencies on December 5, 2018, as a mark of respect for President George H.W. Bush.

December 4, 2018: The IRS issued Notice 2018-95, providing transition relief from the “once-in-always-in” condition for excluding part-time employees under Treas. Reg. § 1.403(b)-5(b)(4)(iii)(B).

December 6, 2018: The IRS in Revenue Ruling 2018-32 released the interest rates for underpayments and overpayments applicable for the calendar quarter beginning January 1, 2019.

December 7, 2018: The IRS issued Notice 2018-97, providing initial guidance on the application of section 83(i) of the Code, enacted in the Tax Cuts and Jobs Act, which allows qualified employees of privately held corporations to defer paying income tax—for up to five years—on the value of qualified stock options and restricted stock units granted to them by their employers.

December 7, 2018: The IRS released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandums and Chief Counsel Advice).

Special thanks to Le Chen in our DC office for this week’s roundup.

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of November 19 – 23, 2018:

November 19, 2018: The IRS in a news release reminds taxpayers that the non-recognition treatment for like-kind exchanges under Code Section 1031 is now limited to certain exchanges of real property.

November 19, 2018: The IRS issued the final regulations under Code Section 267A on allocating costs to certain property produced or acquired for resale by a taxpayer.

November 19, 2018: The IRS issued Revenue Procedure 2018-56, expanding the list of changes of methods of accounting for which the taxpayers may obtain automatic consent under the regulations of Code Section 267A.

November 20, 2018: The IRS issued a notice to request comments on Form W-8CE, Notice of Expatriation and Waiver of Treaty Benefits, which the taxpayers use to notify expatriating payers of information necessary to determine the proper tax treatment of their payments.

November 20, 2018: The IRS in IRS Tax Reform Tax Tip 2018-179 advises that certain taxpayers may benefit from converting an S corporation into a C corporation due to the new, 21 percent tax rate.

November 23, 2018: The IRS released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandum and Chief Counsel Advice).

Special thanks to Alex Cheng-Yi Lee in our DC office for this week’s roundup.

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of November 12 – 16, 2018:

November 14, 2018: The IRS Criminal Investigation Division released the 2018 Annual Report regarding its significant accomplishments and criminal enforcement actions taken in fiscal year 2018.

November 14, 2018: The IRS Advisory Council released its 2018 Annual Report, which addresses and provides recommendations for relevant tax administration issues.

November 14, 2018: The IRS in IRS Tax Reform Tax Tip 2018-176 provides a list of tax reform’s effects on itemized deductions under Code Section 63.

November 15, 2018: The IRS in a news release reminds small business owners of the benefits of the bonus depreciation and immediate asset expensing under Code Section 179, as amended by tax reform.

November 15, 2018: The IRS in Revenue Procedure 2018-57 provides the annual inflation adjustments, which cover 62 items including the tax rate tables.

November 16, 2018: The IRS released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandum and Chief Counsel Advice).

Special thanks to Alex Cheng-Yi Lee in our DC office for this week’s roundup.

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of November 5 – 9, 2018:

November 6, 2018: The IRS added in “Questions and Answers about Reporting Related to Section 965 on 2017 Tax Returns” information concerning the filing of transfer agreements under Internal Revenue Code (Code) Section 965(h)(3) and Section 965(i)(2)(c). For our prior coverage related to the election to pay the transition tax under Code Section 965, see here, here and here.

November 7, 2018: The IRS in IRS Tax Tip 2018-173 reminds taxpayers of the blended tax rate as a result of tax reform and provides guidance on the computation of the blended rate.

November 8, 2018: The IRS in a notice announced that the charter for the Internal Revenue Service Advisory Council has been renewed for two years beginning October 17, 2018.

November 9, 2018: The IRS released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandum and Chief Counsel Advice).

Special thanks to Alex Cheng-Yi Lee in our DC office for this week’s roundup.

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of October 22 – 26, 2018:

October 23, 2018: The IRS released an updated Form 1040 Schedule B for reporting interest and ordinary dividends and draft Form 1120 Schedule D instructions for reporting capital gains and losses. Both documents include changes made to reflect the Tax Cuts and Jobs Act.

October 25, 2018: The IRS released IRS Tax Reform Tax Tip 2018-166, which advises business owners of the basics regarding potential deductions under Internal Revenue Code Section 199A for domestic businesses operated as sole proprietorships or through partnerships, S corporations, trusts and estates.

October 25, 2018: The IRS released Internal Revenue Bulletin 2018-44, dated October 29, 2018, which includes REG-104872-18, Notice 2018-82 and Revenue Procedure 2018-51.

October 26, 2018: The IRS released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandum and Chief Counsel Advice).

Special thanks to Alex Cheng-Yi Lee in our DC office for this week’s roundup.

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of October 15 – 19, 2018:

October 16, 2018: The IRS issued Rev. Proc. 2018-54, which sets forth procedural rules for certain taxpayers that hold investments in one or more segregated asset accounts to elect to treat certain mortgage-backed securities as having deemed issuers for purposes of the diversification requirements of Internal Revenue Code (Code) Section 817(h).

October 17, 2018: The IRS, in Qualified Intermediaries News, reminded entities seeking Qualified Intermediary, Withholding Partnership or Withholding Foreign Trust status with a withholding agreement effective in 2018 that the deadline for submitting the applications is November 16, 2018.

October 18, 2018: The IRS issued Notice 2018-81, which describes the manner in which taxpayers should notify the IRS of revocation of an election to aggregate or disaggregate certain church-related organizations from treatment as a single employer under Code Section 414(c)(2)(C) and (D).

October 18, 2018: The IRS issued Notice 2018-84, which clarifies the suspension of the personal exemption deduction in the newly-added section 151(d)(5) under certain rules in section 36B and section 6011.

October 19, 2018: The IRS issued proposed regulations for investment in opportunity zones, providing guidance on under new Code Section 1400Z-2 relating to gains that may be deferred as a result of a taxpayer’s investment in a qualified opportunity fund.

October 19, 2018: The IRS issued Rev. Rul. 2018-19, which provides guidance on the requirement of original use with respect to land purchased after 2017 in qualified opportunity zones.

October 19, 2018: The IRS released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandum and Chief Counsel Advice).

Special thanks to Alex Cheng-Yi Lee in our DC office for this week’s roundup.

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of October 1 – 5, 2018:

October 1, 2018: The IRS announced in Notice 2018-78 that the deadline for the basis election under Treas. Reg. § 1.965-2 was extended from prior to the publication of final Internal Revenue Code (Code) Section 965 regulations to 90 days after the issuance of the final Code Section 965 regulations.

October 3, 2018: The IRS issued Rev. Proc. 2018-53, which sets out the procedure for taxpayers requesting private letter rulings with respect to divisive reorganizations under Code Sections 355 and 368(a)(1)(D).

October 3, 2018: The IRS issued Notice 2018-76 providing transitional guidance on the deductibility of expenses for certain business meals under Code Section 274 in an entertainment context and stated that it intended to publish proposed regulations on the matter. For more information, see our post here.

October 4, 2018: The IRS released a reminder that calendar-year taxpayers who placed qualifying property in service during 2017 but intend to elect not to claim the new 100 percent depreciation deduction under Code Section 168(k) must file the election before October 15, 2018.

October 5, 2018: The IRS released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandum and Chief Counsel Advice).

Special thanks to Alex Lee in our DC office for this week’s roundup.

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of September 24 – 28, 2018:

September 25, 2018: The IRS announced a study regarding the active trade or business requirements under section 355(b) and stated that it is considering guidance on whether a business can qualify as an active trade or business if entrepreneurial activities, as opposed to investment or other non-business activities, take place with the purpose of earning income in the future, but no income has yet been collected in order to give more ventures access to tax-free spinoff under section 355(b).

September 25, 2018: The IRS issued a statement on the reorganization of the Advance Pricing and Mutual Agreement program, which will merge its economists and non-economists to facilitate the collaboration between team members and optimize economist involvement.

September 27, 2018: The IRS announced in Notice 2018-80 that it will issue proposed regulations providing that accrued market discount is not includable in income under section 451(b), which was added by 2017 tax reform.

September 27, 2018: The IRS issued a release reminding taxpayers ahead of the October 15 tax-filing extension deadline to be aware of criminal who continue to using devious tactics to steal money and personal information from unsuspecting taxpayers.

September 28, 2018: The IRs issued a discussion document regarding recalibration of the Compliance Assurance Process (CAP) program.

September 28, 2018: The IRS released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandum and Chief Counsel Advice).

Special thanks to Alex Cheng-Yi Lee in our DC office for this week’s roundup.

On September 12, 2018, McDermott held the second Tax in the City® Seattle event this year and was pleased to welcome our partner Nina Siewert from our Frankfurt office to join US panelists Elizabeth Chao, Britt Haxton, Kristen Hazel, Sandra McGill and Diann Smith. The team’s key takeaways include:

  • Taxation of the Digital Economy – In March, the European Union proposed a 3 percent interim tax on digital services and a long-term expansion to the definition of a permanent establishment to include a “significant digital presence.” These proposals are unlikely to be passed during 2018. In the meantime, individual countries have passed or are considering unilateral measures to tax digital services.
  • Post-Wayfair – The Supreme Court’s Wayfair decision is good news for states, brick and mortar retailers and software compliance companies, and bad news for online retailers, start-ups and marketplace providers. Its impact on localities and foreign sellers remain to be seen.
  • Taxation of Multinationals: New Developments in US Tax Reform – Taxpayers should consider issues related to the new Base Erosion and Anti-Abuse Tax (BEAT), including whether royalties can be excluded from the BEAT, whether netting or a look-through concept should apply to BEAT; and how BEAT applies to cost-sharing agreements. The section 965 proposed regulations provide guidance about how basis adjustments apply to controlled foreign corporations (CFCs).
  • The Multilateral Instrument (MLI) – US taxpayers should be familiar with the MLI, which goes into effect in 2019. In order for the MLI to apply, both countries must sign the MLI and must opt into the same treaty provisions.

Continue Reading European Partner Joins Tax in the City® for Last Seattle Event of 2018

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of September 17 – 21, 2018:

September 17, 2018: The Treasury Inspector General for Tax Administration (TIGTA) released a report reviewing whether the IRS complied with legal and internal guidelines governing the seizure of property for unpaid taxes.

September 17, 2018: TIGTA released a second report compiling statistical information reported by the IRS in order to provide information about how the IRS uses its compliance resources and the resulting tax collections.

September 18, 2018: The IRS published Revenue Ruling 2018-17, which provides the applicable federal interest rate for October 2018 and other interest rates.

September 19, 2018: The IRS published Revenue Procedure 2018-49, which allows taxpayers that early adopted a method of revenue recognition to change such method to one described in Section 16.11 of Revenue Procedure 2018-31. This is a very important method change that affects many taxpayers who have to comply with ASC 606.

September 20, 2018: The IRS announced in Notice 2018-72 that it intends to amend the section 871(m) regulations to delay the effective date of certain provisions.

September 21, 2018: Treasury and the IRS published proposed regulations that would remove from the section 385 regulations minimum documentation requirements that must be satisfied for certain related-party debt to be respected as such for tax purposes. We previously commented on this here.

September 21, 2018: The IRS released its weekly list of written determinations (e.g., Private Letter Rulings, Technical Advice Memorandum and Chief Counsel Advice).

Special thanks to Kevin Hall in our DC office for this week’s roundup.