On November 4, 2019, the Internal Revenue Service (IRS) announced a new Large Business and International (LB&I) compliance campaign regarding Section’s 965 transition tax under the Tax Cuts and Jobs Act (TCJA). This is one of several dozen compliance campaigns that LB&I has announced since the initial 13 campaigns were identified in 2017, and is

The IRS has released new informal guidance (“Questions and Answers”) regarding section 965, containing information on making successive installment payments, filing transfer agreements as a result of certain acceleration or triggering events, and other matters related to S corporation shareholders making the section 965(i) election.

Consistent with prior advice issued by the IRS (see coverage

Borenstein v. Commissioner is an interesting opinion involving the intersection of canons of statutory construction and jurisdiction. Recently, the US Court of Appeals for the Second Circuit reversed the US Tax Court’s holding in Borenstein that the court lacked jurisdiction to order a refund of an undisputed overpayment made by the taxpayer. The case, which we discussed in a prior post, involved interpreting statutory provisions dealing with claims for a refund after a notice of deficiency was issued. The Tax Court’s holding was based on the application of the plain meaning rule to Internal Revenue Code (Code) Section 6512(b)(3), which limit its jurisdiction to order refunds of overpayments.

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Many states and localities give incentives for business to move or transact in their locations. There has always been a question of whether these incentives are taxable income under federal income tax law. Internal Revenue Code (IRC) section 118, as amended by the Tax Cuts and Jobs Act, P.L. 115-97, provides that “[i]n the case of a corporation, gross income does not include any contribution to the capital of the taxpayer….(b) For purposes of subsection (a), the term “contribution to the capital of the taxpayer” does not include—…(2) any contribution by any governmental entity or civic group (other than a contribution made by a shareholder as such).”

In a recent case, the US Tax Court ruled that certain cash grants given by the State of New Jersey fit squarely within IRC section 118, and were not taxable to the corporate taxpayer. Brokertec Holdings, Inc. v. Commissioner, T.C. Memo. 2019-32.


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