The IRS’s Large Business and International
Division released “Examining a Transaction
Costs Issue” regarding the treatment of transaction costs incurred in certain business transactions.
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TOPICS / CORPORATIONS
Deductions
Foreign-derived intangible income guidance addresses many open questions
Sec. 250 allows domestic corporations a deduction for their “foreign-derived intangible income.” Proposed regulations that were issued earlier this year answer many outstanding questions regarding the calculation of this new deduction but also include documentation requirements that may prove onerous for some taxpayers.
W-2 methods proposed for Sec. 199A(g) deduction by agricultural co-ops
The IRS issued methods for calculating W-2 wages for the Sec. 199A(g) deduction for agricultural and horticultural cooperatives, similar to the former Sec. 199 domestic production activities deduction.
Taxation of sexual harassment settlements post-TCJA
Because of the considerable tax consequences, the new law will encourage plaintiffs and defendants to refrain from including a nondisclosure agreement in their sexual harassment settlements.
Potential pitfalls of charitable contribution substantiation and reporting
Failure to properly complete all required fields on Form 8283, including the donor’s cost or other basis, could jeopardize the entire deduction with respect to the donated property.
New business interest expense rules issued in proposed form
The IRS issued proposed regulations on the business interest expense limitation in Sec. 163(j), which was amended by the law known as the Tax Cuts and Jobs Act.
Commitment fees related to revolving credit agreement
The IRS released advice that concluded that an accrual-based taxpayer was entitled to deduct quarterly commitment fees paid related to its
revolving credit agreement.
More positive news for taxpayers with pilot model supply expenses
Recent events should give taxpayers greater confidence to include pilot model expenses as Sec. 74 expenses and R&D supply costs.
Sec. 162(m) grandfather rule can apply to more than just performance-based compensation
The Sec. 162(m) grandfather rule provides multiple opportunities outside of the exemption for performance-based compensation.
IRS says no to dividends-received deduction related to ETF shares
The IRS concluded that a derivative that referenced a stock index was “substantially similar or related
property” to the stock of an exchange-traded fund that held the components of the index.
IRS issues chief counsel advice on success-based fees
The IRS concluded that a taxpayer was required to capitalize 100% of an investment banking fee because it failed to satisfy the documentation requirement for success-based fees under Regs. Sec. 1.263(a)-5.
Certain moving expenses incurred in 2017 not subject to withholding and employment tax in 2018
Employer reimbursements made in 2018 of qualified moving expenses incurred prior to 2018 in connection with a move that occurred prior to Jan. 1, 2018, may be excluded from employees’ wages and gross income despite the suspension of the exclusion for tax years 2018 through 2025.
IRS clarifies deductibility of business meals
The IRS issued guidance on the deductibility of meal and entertainment expenses after the modification of Sec. 274 by the TCJA.
Proposed regs. outline new business interest expense limitation
The IRS issued proposed regulations on the business interest expense limitation in Sec. 163(j), which was amended by the law known as the Tax Cuts and Jobs Act.
IRS defines covered employees and grandfathered employment contracts under Sec. 162(m)
The IRS issued guidance regarding amended Sec. 162(m), which limits the allowable deduction for remuneration paid by any publicly held corporation to a covered employee to $1 million.
Tax pitfalls of owning a marijuana business
Essentially, for federal tax purposes, marijuana businesses pay income taxes on their gross profit instead of their net income because below-the-
line deductions are not allowed.
Meals continue to be deductible under new IRS guidance
The IRS issued guidance on the deductibility of meal and entertainment expenses after the modification of Sec. 274 by the TCJA.
Revisiting the application of Sec. 280G on partnerships and LLCs
Depending on how a taxpayer’s ownership is structured, the sale of a partnership interest can have a Sec. 280G impact on partners or members that are C corporations.
Timing of the tax deduction for worthless intangibles
The challenge taxpayers frequently face is determining the date of sale, abandonment, or worthlessness.
IRS provides initial guidance on new Sec. 162(m)
The IRS issued guidance regarding amended Sec. 162(m), which limits the allowable deduction for remuneration paid by any publicly held corporation to a covered employee to $1 million.
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