base erosion and anti-abuse tax
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Weekly IRS Roundup December 2 – 6, 2019

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of December 2 – 6, 2019. December 2, 2019: The IRS issued final regulations providing guidance relating to the determination of the foreign tax credit as well as guidance relating to changes made by the 2017 US tax law. The regulations finalize the proposed regulations that were published on December 7, 2018. The regulations also finalize proposed regulations on overall foreign losses that were published on June 25, 2012, as well as certain portions of proposed regulations published on November 7, 2007, relating to a US taxpayer’s obligation to notify the IRS of a foreign tax redetermination. The final regulations will be effective upon their date of publication in the federal register. December 2, 2019: The IRS issued proposed regulations that also provide guidance relating to the determination of the foreign tax credit. The proposed...

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Weekly IRS Roundup March 4 – 8, 2019

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of March 4 – 8, 2019. March 4, 2019: The IRS issued proposed regulations under Section 250 of the Code for determining domestic corporations’ deductions for foreign-derived intangible income (FDII) and global intangible low-taxed income (GILTI). March 4, 2019: The IRS issued a news release kicking off the annual list of what the agency terms the most prevalent or “Dirty Dozen” tax scams. March 5, 2019: The IRS released Notice 2019-18 informing taxpayers that the Treasury Department and the IRS no longer intend to amend the required minimum distribution regulations under § 401(a)(9) of the Internal Revenue Code. March 6, 2019: The IRS scheduled a public hearing for March 25, 2019, on proposed regulations relating to the Base Erosion and Anti-Abuse Tax. March 6, 2019: The IRS released Notice 2019-20 providing a waiver of penalties under...

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Proposed BEAT Regulations | Tax-Free Transactions May Give Rise to a Liability

On December 13, 2018, US Department of the Treasury and the Internal Revenue Service (IRS) released proposed regulations for the Base Erosion and Anti-Abuse Tax (the BEAT), which was added to the Code as part of the 2017 Tax Act. The proposed regulations provide helpful guidance on a range of important topics and generally go a long way toward a reasonable implementation of a very challenging statute. There is one aspect of the proposed regulations, however, that may be an unwelcome surprise for many taxpayers; the proposed regulations treat stock consideration in non-cash transactions as BEAT “payments,” thereby creating the potential for BEAT liability in situations involving certain liquidations, tax-free reorganizations and other non-cash transactions. Located in section 59A, the BEAT imposes a minimum tax on US corporations (and certain foreign corporations, which are not the focus of this Insight) that consistently have annual gross receipts of $500...

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Weekly IRS Roundup December 10 – 14, 2018

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of December 10 –14, 2018: December 10, 2018: The IRS issued Notice 2018-99, providing interim guidance on sections 274 and 512 of the Code, as amended by the Tax Cuts and Jobs Act, dealing with nondeductibile expenses for employer-provided parking. December 10, 2018: The IRS issued Notice 2018-100, providing relief to tax-exempt organizations from penalties for underpayments related to nondeductible expenses for employer-provided parking under section 512 of the Code, as amended by the Tax Cuts and Jobs Act. December 12, 2018: The IRS posted a set of FAQs to its website, answering questions regarding return filing and payment obligations under the transition tax of section 965 of the Code. December 13, 2018: The IRS issued proposed regulations revising withholding requirements under the Foreign Account Tax Compliance Act (FATCA)....

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

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...

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Tax in the City® Seattle Proves to be the Largest Turnout to Date

The second meeting of McDermott’s Tax in the City® initiative in Seattle was held on May 22, 2018 at the Amazon headquarters. McDermott established Tax in the City® in 2014 as a discussion and networking group for women in tax aimed to foster collaboration and mentorship, and to facilitate in-person connections and roundtable events around the country. With the highest attendance rate of any Tax in the City® event to date, the May meeting featured a CLE/CPE presentation about Ethical Considerations around Tax Reform by Elizabeth Chao, Kirsten Hazel, Jane May and Erin Turley, followed by a roundtable discussion about recent tax reform insights led by Britt Haxton, Sandra McGill and Diann Smith. Here’s what we covered at last week’s Tax in the City® Seattle: Tax Reform: Ethical Considerations – Because of tax reform, taxpayers face increased uncertainty and will likely face increased IRS/state scrutiny for their 2017 & 2018 returns. Therefore, it’s crucial...

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The New Base Erosion Minimum Tax

The recently enacted 2017 tax reform act imposes a new “base erosion and anti-abuse tax” (BEAT) on large corporations. The BEAT operates as a limited-scope alternative minimum tax, applied by adding back to taxable income certain deductible payments made to related foreign persons. Although positioned as an anti-abuse rule, the BEAT presents challenges for a wide range of common business structures employed by both non-US-based and US-based multinationals. Continue Reading.

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Tax Reform Conference Committee Reaches Agreement

A House-Senate conference committee has reached agreement on a compromise version of the Tax Cuts and Jobs Act, which includes substantial changes to the corporate and international business taxation rules. The stage now appears to be set for final passage and enactment of the legislation before the end of 2017. Continue Reading.

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