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Weekly IRS Roundup September 14 – September 18, 2020

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
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International News III 2017 | Brexit & the US Administration

McDermott Will & Emery recently published Issue 3, 2017 of International News, which covers a range of legal developments of interest to those operating internationally.

This issue focuses on the upcoming Brexit from the European Union and the changes in the US Administration; both subjects which have dominated headlines over the past year. This issue explores ways in which prepared investors and businesses can continue to function effectively during this period of uncertainty and change.

Read full issue.

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IRS Releases IPU Summarizing Foreign and Domestic Loss Impacts on FTCs

On March 1, 2017, the Internal Revenue Service (IRS) released a new International Practice Unit (IPU) summarizing foreign and domestic loss impacts on foreign tax credits (FTC).  The IPU provides a summary of the law regarding worldwide taxation and FTC limitations, followed by explanations and analysis for IRS agents examining FTC issues.  As we have noted previously, this high-level guidance to field examiners signals the IRS’s continued focus on international tax issues.

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