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Weekly IRS Roundup October 26 – October 30, 2020

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of October 26, 2020 – October 30, 2020. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here. October 26, 2020: The IRS released Rev. Proc. 2020-45 regarding inflation adjusted items for 2021. October 26, 2020: The IRS released Notice 2020-79, which sets out cost-of-living adjustments for benefits and contributions under qualified retirement plans. October 27, 2020: The IRS published corrections to TD 9901 regarding the deduction for foreign-derived intangible income (FDII) and global intangible low-taxed income (GILTI). October 30, 2020: The IRS and US Department of the Treasury released Proposed Regulations containing guidance on the average income test for the low-income housing tax credit. There is a public comment period until December 29, 2020. October 30, 2020: The IRS released...

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Weekly IRS Roundup August 31 – September 4, 2020

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of August 31, 2020 – September 4, 2020. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here. September 1, 2020: The IRS released for publication in the federal register final regulations providing additional guidance on the base erosion and anti-abuse tax (BEAT) imposed on certain large corporate taxpayers with respect to certain payments made to foreign related parties. The final regulations affect corporations with substantial gross receipts that make payments to foreign related parties. September 1, 2020: The IRS announced the launch of the Bipartisan Budget Act (BBA) Centralized Partnership Audit Regime webpage. The Centralized Partnership Audit Regime replaces the Tax Equity and Fiscal Responsibility Act (TEFRA) and the electing large partnership rules. The centralized partnership...

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Weekly IRS Roundup July 6 – July 10, 2020

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of July 6, 2020 – July 10, 2020. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here. July 6, 2020: The IRS added new frequently asked questions on the treatment of grants or loans to businesses through the Coronavirus Relief Fund established by the Coronavirus Aid, Relief and Economic Security (CARES) Act. The IRS stated that a government grant is taxable because the grant generally is not excluded from the business’s gross income except in narrow circumstances. A government loan, however, generally is not included in gross income except to the extent it is forgiven. If a government forgives all or a portion of the loan, then the amount forgiven is included in gross income and taxable unless an exclusion applies. If an exclusion applies, the IRS indicated the taxpayer may lose an...

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Weekly IRS Roundup April 8 – 12, 2019

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of April 8 – 12, 2019. April 8, 2019: The IRS issued a news release warning taxpayers against rushing to file their returns and recommending they file for an extension if needed. April 9, 2019: The IRS issued a news release seeking volunteers for the taxpayer advocate panel. The application process is open through May 3, 2019. April 10, 2019: The IRS issued corrections to final regulations (TD 9846) implementing Section 965 of the code. April 11, 2019: The IRS released Revenue Procedure 2019-18 providing a safe harbor for professional sports teams when determining the value of player and staff-member contracts for the purpose of recognizing gain or loss on a trade, staff-member contract or draft pick. April 11, 2019: The IRS issued corrections to proposed regulations (REG–104464–18) dealing with the amount of the deduction for...

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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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Tax Reform Insight: Eligibility Requirements for Reduced Tax Rate on FDII for Royalties

A domestic corporation's royalty income derived in connection with business conducted outside the United States generally is eligible for the reduced 13.125 percent effective tax rate on foreign derived intangible income (FDII). To qualify, the licensee must be a foreign person, and the intangible property must be used outside the US for the ultimate benefit of an unrelated foreign person. For example, the lower rate generally should be available for royalties from licensing intangible property to an unrelated foreign person for use: (1) in the production and sale of products to foreign customers; (2) to provide services to foreign customers; or (3) to sublicense the intangible property to foreign persons. Royalties from licensing intangible property to an unrelated US corporation that is for use outside the US may not qualify for FDII benefits. Such royalties should qualify, however, if instead the license is with a foreign subsidiary of the US corporation,...

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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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