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

Category Archives: Corporate

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New Trade Act Hikes Penalties for Information Return Failures

Posted in Compliance, Corporate, Procedure

The newly-enacted Trade Preference Extension Act boosts the penalties for failing to provide accurate information returns to the IRS and payees – such as Forms W-2, 1098, and 1099, as well as Forms 1095-B and 1094-B.  The penalty under Section 6721 (reports to the IRS) and Section 6722 (reports to payees) has more than doubled,… Continue Reading

New Regulations Address Treatment of Corporate Partners with Appreciated Partnership Interest

Posted in Corporate, Partnership/LLC

After much promise, the IRS issued two sets of regulations to address the potential avoidance of gain by corporate partners.  First, new § 337(d) temporary regulations, often referred to as the “May Company” regulations, define when and how a corporate partner is deemed to recognize taxable gain in its partnership interest if the partnership acquires… Continue Reading

Treasury Takes Action Against Corporate Inversions

Posted in Corporate, International

Earlier this week, the Treasury Department and the IRS announced that they would issue regulations that substantially limit the U.S. tax benefits of corporate inversions (and certain post-inversion transactions).  The regulations described in Notice 2014-52 and in the IRS “Fact Sheet” will make it more difficult for U.S. corporations to satisfy the ownership thresholds necessary… Continue Reading

IRS Resumes Non-Traditional REIT Conversion Rulings

Posted in Corporate, Real Estate, REITs

The IRS has re-started issuing private letter rulings to corporations wishing to convert to REIT status after an IRS “working group” began studying the issue of non-traditional REITs in June.  This working group was formed after there was significant national attention to the many non-traditional corporations converting to REIT status and the related tax benefits to… Continue Reading

IRS Finalizes Corporate Section 362(e) Loss Duplication Regulations

Posted in Corporate, General, Partnership/LLC, Passthrough Entity

The IRS and Treasury issued final Section 362(e) regulations that restrict the importation and duplication of built-in losses into corporations.  The final regulations generally adopt the substantive rules of the 2006 proposed regulations.  The final regulations are effective for transactions after September 3, 2013, but taxpayers may apply these rules to any transaction occurring after… Continue Reading

IRS Issues Final RIC and REIT Built-In Gain Regulations

Posted in Corporate, Passthrough Entity, Real Estate, REITs

The IRS published final regulations under section 337(d) to provide helpful technical clarification on rules addressing the transfer of C corporation built-in gain assets to a RIC or a REIT.  The final regulations are effective for applicable transactions that occur after August 2, 2013, but taxpayers can apply them to earlier transactions. What are the… Continue Reading

Stock Purchases Just Got Easier – New Regulations Expand Scope of Deemed Asset Purchases

Posted in Corporate

After almost 30 years, the IRS has issued final Section 336(e) regulations to allow more stock purchases to be treated as asset purchases.  In 1986, Congress authorized the IRS to issue regulations where taxpayers can elect under Section 336(e) to treat the sale, exchange, or distribution of at least 80 percent of the voting power and… Continue Reading

IRS Cuts Back on Corporate Reorganization Rulings

Posted in Corporate, General

In new Rev. Proc. 2013-32, the IRS notified taxpayers that as a cost cutting measure it is cutting back on the scope of when it will issue private letter rulings (PLRs) on corporate spin-offs, liquidations, contributions, and reorganizations. Specifically the IRS will no longer provide PLRs on whether a transaction qualifies for non-recognition treatment under… Continue Reading

CBO Report Examines Shifting of Tax Base To Pass-through Entities

Posted in Corporate, Legislative, Partnership/LLC, Passthrough Entity, S corporation

A new Congressional Budget Office Report shows a shifting of business structures to using pass-through entities, subjecting the income only to the individual income tax (as compared to the corporate income tax).  The report notes that the shift has reduced federal revenues but has probably promoted overall investment and a more efficient allocation of resources.  The… Continue Reading

IRS Provides Sample 83(b) Election and Related Examples

Posted in Compensation, Corporate, Partnership/LLC

The IRS published new Rev. Proc. 2012-29, to provide both a sample election under section 83(b) and examples of the income tax consequences of making such an election with respect to compensatory stock.  It is common for a partnership or corporation to issue equity-based compensation to an employee subject to vesting and transfer restrictions.  In… Continue Reading

Proposed Regulations Address RIC and REIT Built-in Gains Tax

Posted in Corporate, REITs

New taxpayer-favorable regulations clarify the application of the section 337(d) and section 1374 built-in gain rules for transfers of property to RICs and REITs.  The new regulations clarify the prior 2003 regulations.  Under the prior regulations, when C corporations transfer appreciated property to a RIC or a REIT, section 1374 rules track any carryover built-in… Continue Reading

New Final and Temporary Foreign Tax Credit Regulations – Technical Taxpayer Rule and Credit Splitter Rules

Posted in Corporate, International, Partnership/LLC

The IRS issued Final Regulations under section 901 and Temporary Regulations under Section 909.  The section 901 regulations adopt, with some changes, the 2006 proposed regulations, relating to who is considered to pay a foreign income tax for purposes of the foreign tax credit (the technical taxpayer rule).  The temporary section 909 regulations include and… Continue Reading

Proposed Regulations Issued for DC’s New Combined Reporting Rules

Posted in Corporate, General, REITs, State and Local Tax

In the fall of 2011, the District of Columbia (DC) adopted a “combined reporting” regime that effectively shares the taxable income of a DC subsidiary to certain related non-DC corporations.  Other states have adopted similar rules, although the specifics vary significantly per state on questions such as whether related non-DC corporations are removed from combined… Continue Reading

Treasury finalizes temporary “hot stock” regulations without material change

Posted in Corporate, General

Treasury has finalized temporary regulations that address the treatment of so-called “hot stock” in spin-offs, split-ups and other transactions intended to be tax-free under Code Section 355.  Such tax-free transactions require that the parent or “distributing” corporation and the subsidiary or “controlled” corporation both have been active trades or businesses for at least five years…. Continue Reading

IRS-Treasury 2011-2012 Business Plan Released

Posted in Corporate, Corporations: International, Estate and Gift, General, Partnership/LLC

The IRS released its annual Priority Guidance Plan on September 2, containing 317 projects that are priorities for the twelve-month period from July 2011 through June 2012.  Although the total number of items on the list is similar to the prior year, some categories contain a more robust list of projects.  For example, partnership tax… Continue Reading

Broker Basis Reporting Guidance

Posted in Corporate

The IRS published interim guidance on the computation of basis of stock subject to broker reporting under section 6045. Taxpayers can rely on new Notice 2011-56 until final regulations are published. The Notice addresses detailed basis calculations in cases such as when a taxpayer changes from a broker’s default averaging method for regulated investment company… Continue Reading