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Tax Law Roundup current law developments in U.S. taxation

Category Archives: General

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IRS Releases FY 2017 Green Book Revenue Proposals

Posted in General, Legislative

It’s that time of year when the President releases his annual wish list of tax revenue proposals, also known as the “Green Book”.  The 2017 Green Book includes many familiar items such as taxing Carried Interests as ordinary income, capping certain itemized deductions by individuals at a 28% tax rate benefit, and broad-based international tax reform. … Continue Reading

House Passes Massive Extenders Package – Moves to Senate

Posted in General, Legislative, Real Estate

Today the House passed the much talked about “Extenders” legislation and it now moves to the Senate with momentum.  The bill makes many of the annual extenders permanent (or for a period of multiple years) and covers a wide range of topics.  Below is a list of some of the provisions affecting the real estate industry,… Continue Reading

Congress Passes Partnership Audit Reform – Obama Expected to Sign

Posted in General, Legislative, Partnership/LLC, Passthrough Entity, Procedure

This morning the Senate passed H.R. 1314 (The Bipartisan Budget Act of 2015), which will completely change the way partnerships (and LLCs taxed as partnerships) are audited.  The House passed the legislation on Wednesday and it is reported that President Obama will sign the legislation as soon as it reaches his desk.  As discussed in… Continue Reading

Partnership Audit Reform Marches Forward

Posted in General, Litigation/Controversy, Partnership/LLC, Passthrough Entity, Tax reform

As part of the current Bipartisan Budget Act of 2015, sweeping changes to the partnership audit rules could be imminent.  The new rules would greatly simplify the IRS procedures for auditing partnerships and likely increase the audit rate of partnerships.  The new rules would replace the current “TEFRA” and “Electing Large Partnership” rules with a… Continue Reading

9th Circuit Disregards Purported Related-Party Partnership

Posted in General, Joint Venture, Litigation/Controversy, Partnership/LLC, Passthrough Entity

In DJB Holding Corp. the 9th Circuit concluded that a purported related-party partnership was not a bona fide partnership for tax purposes and taxable income was redirected to the taxable C corporation performing the underlying profitable services. The ultimate taxable services were performed by the C corporation but a partnership agreement between that C corporation… Continue Reading

IRS Will Extend Some FATCA Transition Rules

Posted in FATCA, General, International

In new Notice 2015-66 the IRS said it plans to amend FATCA regulations to reduce certain collateral restrictions on grandfathered obligations and extend the following transition rules: (1) the date for when withholding on gross proceeds and foreign passthrough payments will begin; (2) the use of limited branches and limited foreign financial institutions (limited FFIs);… Continue Reading

5th Circuit Allows Ordinary Loss for Stock Abandonment

Posted in General

Yesterday the 5th circuit reversed the Tax Court and held in Pilgrim’s Pride that a taxpayer could receive an ordinary loss on the abandonment of a stock interest. In 2004 the taxpayer affirmatively abandoned their stock interest and declined an offer to sell the underlying stock because a $98.6M ordinary loss on abandonment was worth… Continue Reading

Staying Connected in the 2015 Tax Season with the IRS2Go App

Posted in General

As tax filing has evolved from the days of paper and ledgers to electronic filing, it was only a matter of time before the tax community would also embrace the use of mobile technology. While tax season is not eagerly anticipated by many, individuals and businesses alike now welcome many new technologies that make the… Continue Reading

Senate Passes Extenders Legislation For Calendar Year 2014

Posted in General, Legislative

In the annual ritual of last minute legislative action, the Senate has passed the renewal of nearly all of the so-called Extenders legislation by a vote of 76 to 16, which will make the tax incentives applicable to calendar year 2014 if signed by the President.  As is all too common, the Tax Increase Prevention… Continue Reading

Tax Court Strikes Down “DAD” Loss Importation Tax Shelter

Posted in General, Partnership/LLC, Tax Shelters

In consolidated cases known as Kenna Trading LLC, the Tax Court shut down an attempt to contribute foreign currency losses into a US partnership and syndicate the losses to investors by selling partnership interests followed soon by the partnership selling the loss assets.  According to the court, the persons contributing loss assets did not qualify as… Continue Reading

IRS Updates Accounting Method Procedures for Repair Regs

Posted in Deductions, General

In new Rev. Proc. 2014-54, the IRS modified the procedures to obtain the IRS consent to a change in method of accounting for dispositions of tangible depreciable property.  This relates to the “repair regulations” finalized last year.  The new guidance includes procedures to (i) obtain automatic IRS consent in certain contexts, (ii) to allow a late partial… Continue Reading

Final Regulations Provide Partnership Technical Terminations Have No Impact on Unamortized Organization and Start-Up Costs

Posted in General, Joint Venture, Partnership/LLC

The IRS issued final regulations confirming that a technical termination of a partnership does not accelerate unamortized start up or organizational costs under Sections 195 and 709.  The regulations are effective as of the date of the underlying proposed regulations and apply to a Section 708(b)(1)(B) partnership technical termination that occurs on or after December… Continue Reading

New Final Regulations on Written Tax Advice: The End of Circular 230 Disclaimers

Posted in General, Procedure

On Monday, June 9th the IRS issued final regulations (T.D. 9668) that eliminate the requirement to include Circular 230 disclaimers in documents and transmissions and provide other welcome changes to practice standards under Circular 230.  Click here for the new complete Circular 230. Since 2004, practitioners have been grappling with the strict (and complicated) “covered… Continue Reading

IRS Updates FATCA Q&A

Posted in FATCA, General, International, Procedure

On April 18 and again on May 1, the IRS issued newly updated Frequently-Asked-Questions for FATCA compliance following their recent comprehensive regulations on the topic.  The FATCA rules create a series of documentation rules and a potential 30% withholding tax on payments to non-U.S. financial entities.  The Q&A guidance includes answers to common questions relating… Continue Reading

Tax Court Decision Will Help Trusts Avoid Passive Loss Limitations and New 3.8% Tax

Posted in General, Passthrough Entity, trusts and estates

In a highly watched case of The Frank Aragona Trust v. Comm’r., the Tax Court held that it was possible for a trust to qualify for the coveted title of “real estate professional” under the Section 469 passive loss rules.  This result greatly expands the ability of trusts to avoid the passive loss deduction limitations… Continue Reading

Rep. Camp Tax Reform – Top 10 Real Estate Considerations

Posted in General, Partnership/LLC, Passthrough Entity, Real Estate, REITs, Tax reform

Last week Rep. Camp (R-MI), Chair of the House Ways and Means Committee, announced a comprehensive tax reform discussion draft as part of his efforts to reduce top corporate tax rates to 25% and provide individual brackets at 10%, 25%, and for many, 35% (after adding a 10% surtax for non-domestic production income of high-income… Continue Reading

Final Regulations Clarify Timing of Compensation For Restricted Equity

Posted in Compensation, Deferrals, General, Stock Awards, Substantial Risk of Forfeiture

New IRS final regulations address when a service provider (employee) can defer income for compensatory equity that is subject to a “substantial risk of forfeiture”.  Section 83 allows service providers to defer taxation on the transfer of property in connection with the performance of services until the earlier of when the property (a) is no longer… Continue Reading

New Simplified Financial Accounting for Low-Income Housing Tax Credit Projects

Posted in General, Real Estate, Tax Credits

The Financial Accounting Standards Board (FASB) has announced new simplified financial accounting rules for qualified investors in Low-Income Housing Tax Credit (LIHTC) projects. The rule change will make it easier for investors to opt out of the Equity Method of accounting for LIHTC investments and instead use the new Proportional Amortization Method. The main benefit… Continue Reading

IRS Clarifies Mezzanine Real Estate Loan Structure Qualifies for COD Exception

Posted in Cancellation of Debt Income, General, Partnership/LLC, Real Estate

New Rev. Proc. 2014-20 allows “mezzanine” real estate loans to qualify for the Section 108(c) cancellation of debt (COD) income exception.  When a lender forgives debt associated with a qualifying real estate loan, the borrower can avoid tax on the COD income by instead electing to reduce tax basis if the loan is “secured by”… Continue Reading

New Partnership Regulations Address Basis Adjustments and Section 704(c)

Posted in General, Joint Venture, Partnership/LLC, Passthrough Entity

The IRS issued proposed partnership regulations to address a series of longstanding partnership tax issues relating to basis adjustments and built-in gains and losses.  The regulations primarily address a series of questions from the 2004 American Jobs Creation Act (AJCA) not previously covered in Notice 2005-32.  As a bonus, the regulations address two key section… Continue Reading

IRS Issues Historic Rehabilitation Credit Safe Harbor

Posted in General, Joint Venture, Partnership/LLC, Real Estate, Tax Credits

After much anticipation, the IRS issued Rev. Proc. 2014-12, a Safe Harbor for when an investor in an historic rehabilitation credit partnership will be respected as a partner for tax purposes.  Such partner status is essential to allocating rehabilitation credits to the investor and the guidance is a direct result of the 2012 Historic Boardwalk… Continue Reading

IRS Provides Limited Extension for Type III Supporting Organization Transition Rules

Posted in General, Tax Exempt, trusts and estates

Certain charities, known as supporting organizations (SOs), receive favored “public charity” tax exempt status by supporting other public charities or governmental organizations.  In December 2012, the Treasury Department released final and temporary regulations for so-called Type III SOs, including stricter rules for qualifying as a Type III SO, and for avoiding the unfavorable “non-functionally integrated” status. … Continue Reading

Senate Finance Reveals Energy Tax Reform

Posted in Energy, General, Legislative

Today the Senate Finance Committee announced their proposal to streamline the energy tax rules in their latest installment of the Sen. Baucus tax reform proposals.  The staff discussion draft focuses on streamlining energy tax incentives so they are more predictable and technology-neutral.  Under current law, there are 42 different energy tax incentives, including more than… Continue Reading

Final 3.8% Net Investment Income Tax Regulations

Posted in General, Passthrough Entity, Real Estate

The IRS published lengthy final Section 1411 regulations regarding the new 3.8% healthcare tax and issued robust proposed regulations to address additional issues.  The 3.8% Medicare tax is part of the tax provisions in the Affordable Care Act to pay for health care reform.  Section 1411 imposes a 3.8% tax on Net Investment Income of… Continue Reading