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
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
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
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
On January 17, 2024, Senate Finance Committee Chairman Ron Wyden (D-Ore.) and House Ways and Means Committee Chairman Jason Smith (R-Mo.) released a bill, the “Tax Relief for American Families and Workers Act of 2024” (“TRAFA” or the “bill”). All of the provisions in the bill are taxpayer favorable, except
In 2021, the Corporate Transparency Act was enacted into U.S. federal law as part of a multinational effort to rein in the use of entities to mask illegal activity, including proposed rules (effective January 1, 2024) requiring certain types of entities to file a report identifying the entity’s beneficial owners
Introduction
Section 1402(a)(13) of the Internal Revenue Code provides that the distributive share of “limited partners, as such” from a partnership is not subject to self-employment tax.[1] Managers of private equity and hedge funds are routinely structured as limited partnerships to exclude management and incentive fees from self-employment
On July 11, 2023, the Senate Finance Committee released an open letter to the Digital Asset Community asking a variety of questions in connection with possible future legislation. Public comments must be emailed to the Senate Finance Committee staff at responses@finance.senate.gov by September 8, 2023. The questions are related to the following nine general areas.
The balance of this blog describes each area, lists each question, and discusses certain of them.
On July 26, 2023, Senate Finance Chairman Ron Wyden (D-OR) introduced the Ending Tax Breaks for Massive Sovereign Wealth Funds Act (the “bill”), which would deny the benefits of section 892 of the Internal Revenue Code[1] to sovereign wealth funds whose foreign government holds more than $100 billion of investable assets,[2] and either (i) is not a party to a free trade agreement or income tax treaty in effect with the United States or (ii) is North Korea, China, Russia, or Iran.[3] If the bill is passed, it would deny the benefits of section 892 to several of the largest sovereign wealth funds by assets.
Section 892 generally exempts foreign governments (including “integral parts”[4] of foreign governments and foreign governments’ sovereign wealth funds and other “controlled entities”[5]) from U.S. federal income tax on income received from investments in U.S. stocks, bonds, and other securities, financial instruments held in the execution of governmental financial or monetary policy, and interest on deposits in banks in the United States. However, section 892 does not exempt from U.S. federal income tax any income that is derived from the conduct of a “commercial activity”,[6] income received by a “controlled commercial entity” or received (directly or indirectly) from a “controlled commercial entity”,[7] and income derived from the disposition of any interest in a controlled commercial entity.
The bill would generally apply to income received after December 31, 2023. However, the bill contains three grandfather provisions that would apply until 2026.
First, any investment made before the enactment of the bill would be grandfathered until 2026.
Introduction
On May 3, 2023, the United States Tax Court held in ES NPA Holding, LLC v. Commissioner, T.C. Memo. 2023-55, that the taxpayer’s receipt of interests in a partnership in exchange for services rendered to the sole owner of the business before it became a partnership was for the benefit of the future partnership and, therefore, was a profits interest (rather than a capital interest). The taxpayer did not provide ongoing services to the partnership.