I. Introduction. On March 4, 2019, the Internal Revenue Service (the “IRS”) and the Department of the Treasury (the “Treasury”) released proposed regulations (the “Proposed Regulations”) regarding the deduction for “foreign-derived intangible income” (“FDII”) under section 250 of the Internal Revenue Code.[1] Section 250 was enacted in 2017 as part of the tax reform act.[2] … Continue Reading
On January 18, 2019, the U.S. Department of Treasury (“Treasury”) and the Internal Revenue Service (the “IRS”) released final regulations (the “Final Regulations”) regarding the “passthrough deduction” for qualified trade or business income under section 199A of the Internal Revenue Code.[1] The Final Regulations modify proposed regulations (the “Proposed Regulations”) that were released in August … Continue Reading
On January 18, the Internal Revenue Service (“IRS”) and the U.S. Department of the Treasury issued final regulations (the “Final Regulations”) on the “pass through” deduction under section 199A[1] of the Internal Revenue Code (the “Code”). Very generally, section 199A provides individuals with a deduction of up to 20% of income from a domestic “trade … Continue Reading
On December 20, 2018, the Internal Revenue Service (the “IRS”) and the Department of the Treasury (the “Treasury”) released proposed “anti-hybrid” regulations (the “Proposed Regulations”) under sections 267A, 245A(e), and 1503(d) of the Internal Revenue Code.[1] Sections 267A and 245A(e) were enacted in 2017 as part of the tax reform act.[2] Very generally, these sections … Continue Reading
On December 13, 2018, the Internal Revenue Service (the “IRS”) and the Department of the Treasury (the “Treasury”) released proposed regulations (the “Proposed Regulations”) with respect to the “base erosion and anti-abuse tax” (the “BEAT”) under section 59A of the Internal Revenue Code.[1] The BEAT was enacted in 2017 as part of the tax reform … Continue Reading
From Proskauer’s Not For Profit / Exempt Organization Blog, a discussion of recent IRS guidance and New York State legislative relief on Internal Revenue Code 512(a)(7), added by the Tax Cuts and Jobs Act (“TCJA”)… Inclusion of Qualified Transportation Fringe Benefits in UBTI: Guidance, Relief, and Rumors of Possible Repeal… Continue Reading
On December 13, 2018, the Internal Revenue Service (the “IRS”) and the U.S. Department of the Treasury (the “Treasury”) issued proposed regulations (the “Proposed Regulations”) addressing various aspects of the withholding and information reporting regime commonly referred to as “FATCA”.[1] The Proposed Regulations provide significant relief from potential withholding and compliance burdens that U.S. and non-U.S. … Continue Reading
On November 26, 2018, the Internal Revenue Service (the “IRS”) and the U.S. Department of the Treasury (the “Treasury”) issued proposed regulations (the “Proposed Regulations”) under section 163(j) of the Internal Revenue Code (the “Code”).[1] Section 163(j) limits the deductibility of net business interest expense to 30% of “adjusted taxable income” plus “floor plan financing … Continue Reading
Introduction On October 31, 2018, the U.S. Treasury Department (“Treasury”) and the Internal Revenue Service (the “IRS”) proposed new regulations (the “Proposed Regulations”)[1] that are likely to allow many controlled foreign corporations (“CFCs”)[2] of U.S. multi-national borrowers to guarantee the debt of their parents and to allow the U.S. parent to pledge more than 66 … Continue Reading
The Tax Cuts and Jobs Act enacted section 1400Z-2 of the Internal Revenue Code, which created the qualified opportunity zone program. The program is designed to encourage investment in distressed communities designated as “qualified opportunity zones” by providing tax incentives to invest in “qualified opportunity funds” (“opportunity funds”) that, in turn, invest directly or indirectly … Continue Reading
The IRS announced yesterday, in IR 2017-210 (the “Advisory”), that state property taxes must be “assessed” in 2017 in order for such taxes to be prepaid in calendar year 2017 and therefore deductible in 2017. The Advisory says that state or local law determines whether and when a property tax is “assessed,” but the Advisory … Continue Reading
The Internal Revenue Service (the “IRS”) has issued Notice 2017-75 (the “Notice”), which provides certain limited relief from the strict requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), in order to pay income taxes on deferrals attributable to services performed before 2009 that are required to be included … Continue Reading
In this first of (we hope) many posts on the interesting and myriad tax issues arising in the world of cryptocurrency and blockchain technology, we focus on the very basic U.S. federal income tax consequences of cryptocurrency transactions. The following is a very high-level discussion of the consequences generally applicable to U.S. individual holders of … Continue Reading
In a notice of proposed rulemaking issued on October 11, 2017 (the “NPRM”), the U.S. Department of the Treasury (“Treasury”) and the Internal Revenue Service (“IRS”) proposed an amendment to existing regulations (the “Proposed Regulation”) under Section 754 of the Internal Revenue Code of 1986, as amended (the “Code”). The Proposed Regulation eliminates the requirement … Continue Reading
Today, the Wall Street Journal considers again, on its front page above the fold, the potential benefits of corporate spin-off transactions (https://www.wsj.com/articles/the-reason-investors-love-spinoffs-juicier-returns-1507681008 (subscription required)). The Journal article notes that the S&P Spin-Off Index has outperformed the S&P 500 Index by nearly 190 percentage points in the last ten years. Also discussed are the wide-ranging reasons investors favor spin-off transactions … Continue Reading
On September 21, 2017, the Internal Revenue Service (the “IRS”) issued Revenue Procedure 2017-52[1] (the “Rev. Proc.”), introducing an 18-month “pilot program” in respect of corporate “spin-off,” “split-up” and “split-off” transactions (“Spin-off Transactions”[2]). Under this pilot program, the IRS will again issue private letter rulings on the general federal income tax consequences of Spin-off Transactions … Continue Reading
On June 13, 2017, the U.S. Internal Revenue Service (“IRS”) and the Department of the Treasury (“Treasury”) re-released proposed regulations (REG 136118-15) that provide guidance on the new centralized partnership audit regime. The centralized partnership audit regime was enacted in November 2015 by Section 1101 of the Bipartisan Budget Act of 2015, P.L. 114-74, and … Continue Reading
On April 6, 2017, the Internal Revenue Service (the IRS) added three new frequently asked questions to its Foreign Account Tax Compliance Act (“FATCA”) compliance page, which is available only online.[1] These additional FAQs clarify recent temporary regulations (the “Temporary Regulations”) requiring that a beneficial owner withholding certificate contain a foreign taxpayer identification number (“TIN”) and, … Continue Reading
On October 13, 2016, the Treasury Department and the Internal Revenue Service issued final and temporary regulations under section 385 of the Internal Revenue Code. The final and temporary regulations recharacterize certain debt instruments as equity for all federal income tax purposes. The final and temporary regulations narrow considerably the scope of the proposed regulations … Continue Reading
The U.S. Internal Revenue Service (“IRS”) released Revenue Procedure 2016-45 (the “Revenue Procedure”) on August 26, 2016, permitting taxpayers once again to seek private letter rulings on issues of “corporate business purpose” and “device” under Section 355 of the U.S. Internal Revenue Code of 1986, as amended (dealing with tax-free spin-offs and related transactions). The corporate … Continue Reading
The IRS adopted final regulations that no longer require taxpayers who have made Internal Revenue Code §83(b) elections to attach a copy of the election to their annual federal income tax return. Under §83, restricted stock granted in connection with the performance of services generally becomes taxable as ordinary income compensation when it is no … Continue Reading
The U.S. Internal Revenue Service (IRS) and the Department of the Treasury (“Treasury”) have published proposed regulations that would modify the device and active trade or business requirements for tax-free spin-offs under section 355 of the Code in three important respects. First, the proposed regulations clarify the “device” test and its relationship to the “business … Continue Reading
In general, proposed rulemaking issued in December 2008 with respect to income inclusion under Section 409A of the Internal Revenue Code of 1986, as amended (available here) provides that if there is a Section 409A violation in a taxable year, all compensation deferred under the applicable nonqualified deferred compensation arrangement for that taxable year and … Continue Reading
Pursuant to the final regulations under Section 409A of the Internal Revenue Code of 1986, as amended, a termination of employment generally occurs at such time as the employer and employee reasonably anticipate that the level of services to be performed after such time, whether as an employee or an independent contractor, would permanently decrease … Continue Reading
