Document Summaries for the week of Jan. 17, 2022
Tax document summaries for the week of Jan. 17–21, 2022, covering international, IRS procedure, and more.
IRS updates weighted average interest rates, yield curves, and segment rates
The IRS issued a notice that provides guidance on the corporate bond monthly yield curve, the corresponding spot segment rates used under Sec. 417(e)(3), and the 24-month average segment rates under Sec. 430(h)(2). In addition, the notice provides guidance as to the interest rate on 30-year Treasury securities under Sec. 417(e)(3)(A)(ii)(II) as in effect for plan years beginning before 2008 and the 30-year Treasury weighted average rate under Sec. 431(c)(6)(E)(ii)(I). Notice 2022-7 (1/20/22).
Final regs. issued on foreign tax credit and FDII
The IRS issued final regulations relating to the foreign tax credit, including the disallowance of a credit or deduction for foreign income taxes with respect to dividends eligible for a dividends-received deduction; the allocation and apportionment of interest expense, foreign income tax expense, and certain deductions of life insurance companies; the definition of a foreign income tax and a tax in lieu of an income tax; the definition of foreign branch category income; and the time at which foreign taxes accrue and can be claimed as a credit. The regulations also contain clarifying rules relating to foreign-derived intangible income (FDII). T.D. 9959 (1/18/22).
Chief Counsel addresses application of anti-abuse rule under Sec. 956
The Office of Chief Counsel was asked whether, under the anti-abuse rule in Regs. Sec. 1.956-1(b)(1)(ii), certain controlled foreign corporations (CFCs) indirectly held loans of a related CFC that were issued on or after Sept. 1, 2015. The Chief Counsel's Office advised that the CFCs indirectly held the loans of the related CFC because that CFC was funded with a principal purpose of avoiding the application of Sec. 956. CCA 202203013 (1/21/22).
IRS issues AFRs for February 2022
The IRS issued a ruling providing tables of various prescribed rates for federal income tax purposes for February 2022. Table 1 contains the short-term, midterm, and long-term applicable federal rates (AFRs) for purposes of Sec. 1274(d). Table 2 contains the short-term, midterm, and long-term adjusted AFRs for purposes of Sec. 1288(b). Table 3 sets forth the adjusted federal long-term rate and the long-term tax-exempt rate described in Sec. 382(f). Table 4 contains the percentages for determining the low-income housing credit described in Sec. 42(b)(1) for buildings placed in service during February 2022 (although under Sec. 42(b)(2), the percentage for non–federally subsidized new buildings placed in service after July 30, 2008, is not less than 9%). Table 5 contains 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 reversionary interest for purposes of Sec. 7520. Rev. Rul. 2022-3 (1/18/22).
IRS guidance addresses determination of substantially equal periodic payments
The IRS issued a notice that addresses whether payments from an individual account under a qualified retirement plan are considered a series of substantially equal periodic payments within the meaning of Sec. 72(t)(2)(A)(iv). The guidance also applies for purposes of determining whether a distribution from a nonqualified annuity contract is part of a series of substantially equal periodic payments within the meaning of Sec. 72(q)(2)(D) and modifies and supersedes Rev. Rul. 2002-62 and Notice 2004-15. Notice 2022-6 (1/18/22).
IRS issues procedures for employee status determinations
The IRS issued a revenue procedure that provides information about when and how the IRS will issue a Notice of Employment Tax Determination Under IRC § 7436 and how taxpayers petition for Tax Court review of certain IRS determinations under Sec. 7436. The revenue procedure modifies and supersedes Notice 2002-5. Rev. Proc. 2022-13 (1/19/22) (see related news story).
Appeals court upholds permanent injunction against tax return preparer
The Eleventh Circuit upheld a district court's injunction that permanently enjoined a tax return preparer and her firm from preparing federal tax returns, finding that the district court did not abuse its discretion by issuing a broad permanent injunction. Cotton, No. 21-10612 (11th Cir. 1/20/22).
IRS announces tax relief for Tennessee storm victims
The IRS announced that victims of severe storms, straight-line winds, and tornadoes in parts of Tennessee beginning Dec, 10, 2021, now have until May 16, 2022, to file various individual and business tax returns and make tax payments. TN-2022-01 (1/20/22).
Business meal deductions after the TCJA
This article discusses the history of the deduction of business meal expenses and the new rules under the TCJA and the regulations and provides a framework for documenting and substantiating the deduction.
Quirks spurred by COVID-19 tax relief
This article discusses some procedural and administrative quirks that have emerged with the new tax legislative, regulatory, and procedural guidance related to COVID-19.