The IRS has announced a new audit campaign targeted at the use of private aircraft, a/k/a “corporate jets”.  This has been an intensifying area of focus by the IRS over the last few years as a result of recently-increased tax benefits for private aircraft.  Clients who use airplanes for business…

On October 4, 2024, the Internal Revenue Service (the “IRS”) released Private Letter Ruling 202440007, which concluded that the lack of income and assets in the first taxable year of an entity that had elected to be treated as a real estate investment trust (“REIT”) did not cause the entity…

On September 13, 2024, California’s Franchise Tax Board (“FTB”) released updated proposed regulations (“Draft Regulations”), which would amend the rules regarding market-based sourcing for sales other than sales of tangible personal property.  These proposed rules would have a significant effect on professional service providers, including asset managers. The Draft Regulations…

The IRS and Senator Warren Raise Concerns about Lodging and Health Care REITs

    I. Introduction

    On September 3, 2024, Senator Elizabeth Warren (D-MA) sent a letter to the Internal Revenue Service (the “IRS”) urging it to “increase enforcement scrutiny of REITs, especially large health and hospitality REITs that may be…

    On Monday, September 9, 2024, the California FTB approved proposed amendments to California’s personal income tax code. 

    This proposed rule would impose California income tax on non-resident/non-employee corporate directors receiving fees for services performed outside of California if the corporation has a commercial domicile in California (presumably because the corporation…

    1. Introduction.

        On July 12, 2024, the U.S. Department of the Treasury (“Treasury”) and the Internal Revenue Service (“IRS”) issued proposed regulations that would classify “basket contract transactions”, which are derivatives (i) with a term of more than a year (or that spans two taxable years), (ii) that reference a…

        On June 17, 2024, the IRS announced the formation of a dedicated group in the Office of Chief Counsel specifically focused on developing guidance on partnerships, which is expected to work with a new “passthrough working group” being established in the Large Business and International Division of the IRS. At the same time, Treasury and the IRS launched an attack on a specific partnership strategy involving so-called “basis bump” or “basis shifting” transactions involving related parties through a combination of guidance challenging the substance of such arrangements and declaring such arrangements to be “transactions of interest” that are subject to the strict disclosure requirements of the “reportable transaction” rules.1

        On June 20, 2024, the U.S. Supreme Court ruled 7-2 that the so called mandatory repatriation tax under Internal Revenue Code Section 965 (“MRT”) is constitutional. 

        Justice Kavanaugh wrote the majority opinion.  Justice Thomas (joined by Justice Gorsuch) dissented.  Justice Barrett (joined by Justice Alito) and Justice Jackson delivered separate…