C corporations Archives - TAX CONTROVERSY 360

Weekly IRS Roundup August 12 – August 16, 2024

by Kevin Spencer, Evan Walters and Sama Kaseer | Aug 22, 2024 | IRS Guidance, Tax Reform

Check out our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of August 12, 2024 – August 16, 2024.

August 12, 2024: The IRS released Internal Revenue Bulletin 2024-33, which includes final regulations on the treatment of property used to acquire parent stock or securities in certain triangular reorganizations involving foreign corporations under Section 367 of the Internal Revenue Code. These regulations, effective July 17, 2024, also cover the consequences for recipients of such stock or securities and subsequent inbound nonrecognition transactions.

August 12, 2024: The IRS reminded taxpayers of the option to electronically request relief for certain late-filed international documents, such as gain recognition agreements and dual consolidated losses, using eFax. This digital option, introduced in August 2023, aims to streamline the process and reduce the burden of paper documentation.

August 12, 2024: The IRS extended the deadline to file federal individual and business tax returns and make tax payments for certain individuals and businesses in Minnesota that were affected by severe weather that began on June 16, 2024. The new deadline is February 3, 2025. The extended deadline is available to taxpayers in any area designated by the Federal Emergency Management Agency (FEMA), including individuals and households that reside or have a business in Blue Earth County or one of the other 24 specified Minnesota counties.

August 13, 2024: The IRS released an updated Written Information Security Plan (WISP) to help tax professionals protect against identity theft and data breaches. As part of the Protect Your Clients; Protect Yourself campaign, WISP highlights best practices like multifactor authentication and mandatory reporting of security incidents affecting more than 500 individuals.

August 13, 2024: The IRS extended the deadline to file federal individual and business tax returns and make tax payments for certain individuals and businesses in Vermont that were affected by Hurricane Debby. The new deadline is February 3, 2025. The extended deadline is available to taxpayers in any area designated by FEMA, including individuals and households that reside or have a business in any of the 14 Vermont counties.

August 14, 2024: The IRS encouraged qualifying businesses, tax-exempt organizations and government entities to complete pre-filing registration for elective pay related to 2023 projects at least 120 days before they file their tax returns. By registering, taxpayers can earn certain tax credits under the Inflation Reduction Act of 2022 and the CHIPS and Science Act.

August 15, 2024: The IRS announced the opening of the application period for the 2025 Compliance Assurance Process program, which will run from September 4, 2024, to October 31, 2024. This program is available to certain privately held C corporations and publicly traded corporations with at least $10 million in assets.

August 15, 2024: The IRS reminded truckers that the deadline to file IRS Form 2290, Heavy Highway [...]

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Weekly IRS Roundup September 14 – September 18, 2020

by McDermott Will & Emery | Sep 22, 2020 | IRS Guidance, Tax Reform

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of September 14, 2020 – September 18, 2020. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here.

September 14, 2020: The IRS published final regulations providing guidance on the limitation on the deduction for business interest expense after amendment of the Internal Revenue Code (Code) by the Tax Cuts and Jobs Act (TCJA) and the Coronavirus Aid, Relief and Economic Security Act (CARES Act). The regulations provide guidance to taxpayers on how to calculate the limitation, what constitutes interest for purposes of the limitation, which taxpayers and trades or businesses are subject to the limitation and how the limitation applies in consolidated group, partnership, international and other contexts. The final regulations vary slightly from the document released on IRS.gov on July 28, 2020.

September 14, 2020: The IRS published a criminal tax bulletin concerning recent case law involving the Criminal Tax Division.

September 15, 2020: The IRS published Rev. Rul. 2020-20 that provides various prescribed rates for federal income tax purposes for October 2020, including: (1) the applicable federal rates (AFR) under section 1274(d); (2) the adjusted applicable federal rates (adjusted AFR) under section 1288(b); (3) the adjusted federal long-term rate and the long-term tax-exempt rate under section 382(f); (4) the appropriate percentages for determining the low-income housing credit under Section 42(b)(1); and (5) the federal rate for determining the present value of an annuity, an interest for life or for a term of years or a remainder or a reversionary interest under section 7520.

September 15, 2020: The IRS published a practice unit covering Last In-First Out (LIFO) inventories under various LIFO methods.

September 15, 2020: The IRS released for future publication in the Federal Register final regulations concerning the definition of an eligible terminated S corporation and rules relating to distributions of money by such a corporation after the post-termination transition period. The regulation package also amends current regulations to extend the treatment of distributions of money during the post-termination transition period to all shareholders of the corporation and clarifies the allocation of current earnings and profits to distributions of money and other property. The final regulations affect C corporations that were formerly S corporations and the shareholders of such corporations.

September 16, 2020: The IRS published a memorandum providing flexibility for taxpayers who are temporarily unable to meet the payment terms on accepted offers due to the economic impact of COVID-19. The procedures will expire December 31, 2020, unless extended.

September 17, 2020: The IRS published a practice unit providing an overview of the Overall Foreign Loss (OFL), Separate Limitation Loss (SLL) and Overall Domestic Loss (ODL) rules, as well as related examples.

September 17, 2020: The IRS
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Tax Reform Insights: IRS Proposes Section 163(j) Regulations – New Business Interest Expenses Deduction Limit

by David Sherwood and Kevin Hall | Dec 26, 2018 | IRS Guidance, Tax Reform, Uncategorized

On November 26, 2018, the Internal Revenue Service (IRS) issued proposed regulations (Proposed Regulations) pursuant to section 163(j). Public Law 115-97, the Tax Cuts and Jobs Act (TCJA), amended Internal Revenue Code (Code) Section 163 by modifying paragraph (j) to limit the amount of business interest a taxpayer may deduct for taxable years beginning after December 31, 2017. The amendment generally limits the deduction for business interest to the sum of a taxpayer’s business interest income and thirty percent of a taxpayer’s adjusted taxable income (ATI) for the taxable year.

The Code Section 163(j) limit is also increased by a taxpayer’s “floor plan financing interest,” which is certain interest used to finance the acquisition of motor vehicles held for sale or lease. Code Section 163(j)(8) defines ATI as a taxpayer’s taxable income computed without regard to: any item of income, gain, deduction, or loss which is not properly allocable to a trade or business; any business interest or business interest income; any net operating loss deduction under Code Section 172; the amount of any deduction for qualified business income under Code Section 199A; and in the case of taxable years beginning before January 1, 2022, any deduction allowable for depreciation, amortization, or depletion.

The Proposed Regulations address a variety of issues, including the following:

Trade or Business. New Code Section 163(j) defines business interest income and expense as amounts that are “properly allocable to a trade or business,” but it does not define trade or business.” The Proposed Regulations define a “trade or business” by reference to Code Section 162 because Code Section 162(a) provides the “most established and developed definition of trade or business.”
Interest. The Proposed Regulations define “interest” broadly to include other ordinary income items similar to interest, such as substitute interest payments in securities lending transactions, loan commitment fees, debt issuance costs, Code Section 707(c) guaranteed payments for the use of capital, and factoring income. Proposed Regulation § 1.163(j)-3 introduces rules, including ordering rules, for the relationship between Code Section 163(j) and other provisions affecting interest.
S Corporations. Proposed Regulation § 1.163(j)-6 provides guidance regarding the application of the Code Section 163(j) deduction to partnerships and S corporations.
CFCs. The Proposed Regulations provide that Code Section 163(j) may apply to limit the deductibility of a controlled foreign corporation’s (CFC’s) business interest expense, thereby potentially limiting a CFC’s deduction of business interest for purposes of computing subpart F income and tested income under Code Section 951A(c)(2)(A).
ECI. The Proposed Regulations also provide that Code Section 163(j) applies to foreign corporations and other foreign persons for purposes of computing income effectively connected with a US trade or business.

The Proposed Regulations provide a variety of other rules. Some of the notable provisions include rules applicable to REITs, RICs, tax-exempt entities and consolidated group members. They also provide rules regarding the disallowed business interest expense carryforwards of C corporations and rules regarding elections for excepted trades or businesses and rules for allocating expenses and [...]

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