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Weekly IRS Roundup July 20 – July 24, 2020

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of July 20, 2020 – July 24, 2020. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here. July 20, 2020: The IRS published a news release on after-tax-day tips for taxpayers who missed the July 15, 2020, tax deadline and did not request an extension. The tips include advice on obtaining a refund and on reducing penalties and interest. July 20, 2020: The IRS released public comments on the 2020-21 Priority Guidance Plan in response to Notice 2020-47, which invited the public to submit recommendations for items to be included on the 2020-2021 Priority Guidance Plan. The US Department of the Treasury and the IRS use the Priority Guidance Plan each year to identify and prioritize the tax issues that should be addressed through regulations, revenue rulings, revenue procedures, notices and other...

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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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Code Sec. 367(a) and (d) After the TCJA

Code Sec. 367(a) and (d) subject to taxation a transfer of tangible and intangible property by a U.S. person to a foreign corporation in an otherwise tax-free transaction. While for many years exceptions were provided for transfers of certain types of property, the Tax Cuts and Jobs Act (“TCJA”) amended Code Sec. 367, removing the exceptions and broadening the definition of intangible property. Specifically, Code Sec. 367(a)(1) provides generally that gain realized on the transfer of property by a U.S. person to a foreign corporation is subject to taxation. Former Code Sec. 367(a)(3) had provided an exception for property transferred to a foreign corporation for use in an active trade or business outside the United States. For example, this exception was available for the transfer of a foreign plant and equipment. The exception did not apply to a transfer of inventory, accounts receivable, intangible property within the meaning of former Code Sec. 936(h)(3)...

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Weekly IRS Roundup September 30 – October 4, 2019

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of September 30 – October 4, 2019. September 30, 2019: The IRS published a draft of the tax year 2019: (i) Form 1065, US Return of Partnership Income; (ii) its Schedule K-1, Partner’s Share of Income, Deductions, Credits, etc.; (iii) Form 1120-S, US Income Tax Return for an S Corporation; and (iv) its Schedule K-1, Shareholder’s Share of Income, Deductions, Credits, etc. The IRS intends the changes to the form and schedule to improve the quality of the information reported by partnerships both to the IRS and the partners of such entities and to improve the data available for the IRS’s compliance selection processes. This draft gives tax practitioners a preview of the changes and software providers the information they need to update systems before the final version of the updated forms and schedules are released in December. There is a...

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Weekly IRS Roundup August 26 – 30, 2019

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of August 26 – 30, 2019. August 26, 2019: The IRS released a Treasury Decision in which it issued correcting amendments to TD 9866 (i.e., the global intangible low-taxed income (GILTI) and Foreign Tax Credit Regulations pertaining to IRC §951A). The correcting amendments to Treasury Regulations Section 1.951A-2 include in the second sentence of paragraph (c)(4)(iv)(A)(2)(i), removing the language “paragraph (c)(4)(ii)(A)” and adding “paragraph (c)(4)(iii)(A)” in its place, and in the third sentence, removing the language “paragraph (c)(4)(ii)(B)” and adding “paragraph (c)(4)(iii)(B)” in its place, among other changes. August 27, 2019: The IRS released a revenue procedure in which it added Georgia to the list of countries for which the United States has an automatic exchange of deposit interest information as related to certain...

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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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Weekly IRS Roundup January 7 – 11, 2019

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of January 7 – 11, 2019. Tax news is very limited because of the government shutdown: January 7, 2019: The IRS issued a news release confirming that, despite the partial federal government shutdown, it will process tax returns beginning January 28, 2019, and provide refunds to taxpayers as scheduled. January 7, 2019: The IRS released the final 2018 version of Form 8996, dealing with certification as a qualified opportunity fund under section 1400Z-2 of the Code, enacted in the Tax Cuts and Jobs Act. January 7, 2019: The IRS issued an announcement cancelling a public hearing—originally scheduled for January 10, 2019—on proposed regulations concerning qualified opportunity funds under section 1400Z-2 of the Code, in light of the partial federal government shutdown. January 7, 2019: The IRS released final instructions for Form 8992, dealing...

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Bloomberg Tax: Prop. GILTI Regs: ‘Tested Income’

The Treasury and IRS recently issued proposed regulations under §951A.1 The regulations provide rules for determining the amount of the inclusion in a U.S. shareholder’s gross income of global intangible low-taxed income (GILTI). The GILTI inclusion amount is the aggregate of a U.S. shareholder’s pro rata shares of tested income less tested losses from each directly and indirectly owned controlled foreign corporation (CFC), less 10% of its aggregate pro rata shares of qualified business asset investments (reduced by certain interest expense). 2 This article discusses the rules in the proposed regulations for determining a CFC’s tested income. Read the full article. Originally published in Bloomberg Tax: Tax Management International Journal, November 2018.

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Bring That CFC on Home: Domesticating Individually-Owned CFCs After Tax Reform

Several changes in tax reform have a disparate impact on non-corporate US shareholders of foreign corporations compared with their corporate counterparts. Many such non-corporate shareholders face an expensive tax increase. They may attempt to mitigate this increase by transferring their shares to a US corporation or making a Section 962 election. This article examines the new rules governing US individuals who own foreign corporations and discusses the most significant recent changes, including a lack of participation exemption for US individuals who own foreign corporations and a higher transition tax rate. It further outlines new options for domestication of such foreign corporations. Continue Reading. Originally published in Bloomberg BNA Daily Tax Report – October 26, 2018 – Number 205.

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