On December 23, 2024, in Denham Capital Management LP v. Commissioner (T.C. Memo. 2024-114), the Tax Court reaffirmed its earlier ruling in Soroban Capital Partners LP v. Commissioner (161 T.C. No. 12.) that active limited partners of a state law limited partnership are not entitled to the “limited partner exception”
Increase in Tax Audits of Use of Private Aircraft, a/k/a “Corporate Jets”
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
California FTB Releases Updated Proposed Regulations on Market-Based Sourcing Rules – Implications for Asset Managers
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
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
California Franchise Tax Board (FTB) to Apply Market-Based Sourcing Rules to Nonresident Directors of California Based Corporations
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
Treasury and IRS Announce New Attack on Partnership Basis-Shifting Structures and Establishment of “Passthrough Working Group” to Develop Further Partnership Guidance.
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
Proposed Regulations Issued on the Excise Tax on Repurchases of Corporate Stock
Introduction
On April 9, 2024, the Department of the Treasury (“Treasury”) and the Internal Revenue Service (the “IRS”) issued two sets of proposed Treasury Regulations related to section 4501, REG-115710-22, which provides guidance on the application of section 4501, and REG-118499-23 (together with REG-115710-22, the
Final Regulations on Domestically Controlled REITs
- Introduction
On April 24, 2024, the U.S. Department of the Treasury (“Treasury”) and the Internal Revenue Service (the “IRS”) issued final regulations[1] on the definition of “domestically controlled” real estate investment trusts (“REITs”) (the “Final Regulations”). The Final Regulations retain
Summary of the Biden Administration’s Fiscal Year 2025 Green Book Tax Proposals
On March 11, 2024, the Biden Administration released the Fiscal Year 2025 Budget, and the “General Explanations of the Administration’s Fiscal Year 2025 Revenue Proposals,” which is commonly referred to as the “Green Book.” The Green Book summarizes the Administration’s tax proposals contained in the Budget. The Green Book is not
Recent Updates from the IRS and Treasury on the Superfund Chemical Tax
I. Executive Summary
On February 15, 2024, the IRS and Treasury issued a supplemental notice to a prior notice from December 2022, to correct a petition requesting that the Superfund Chemical Tax apply to polyphenylene sulfide. While the supplemental notice is narrow in scope, the IRS and Treasury have requested