Gains & Losses

Losses Related to an Insolvent Corporation

The IRS issued a general legal advice memorandum that addressed the tax consequences when an insolvent foreign subsidiary of a domestic U.S. corporation elected to be classified as a partnership.

Recognized Built-In Loss Is Subject to Sec. 382 Limitation

The IRS concluded that a taxpayer may include in its computation of taxable income or NOL only an amount of recognized built-in loss (RBIL) equal to its Sec. 382 limitation, whether or not the taxpayer has taxable income without regard to RBIL.

IRS Offers Another Mark-to-Market Valuation Safe Harbor

The IRS has released an Industry Issue Directive instructing its examining agents to offer a safe-harbor election to certain taxpayers under examination regarding the market values used in their mark-to-market calculations.

Ordinary Worthless Stock Deductions: Characterizing Subsidiary Receipts

An ordinary loss deduction for worthless stock of an affiliated operating subsidiary generally is permitted as long as more than 90% of the subsidiary’s gross receipts are from active operating income. This item discusses the difficulty of determining whether a subsidiary’s gross receipts qualify as active operating income for this purpose under various circumstances.

The Impact of Unified Loss Rules on Earnings and Profits

This item explores whether an adjustment is made for E&P purposes when a member of a consolidated group is required under the unified loss rules to reduce its basis in the stock of another member for regular tax purposes upon the first member's disposition of the second member's stock at a loss for regular tax purposes.

Extended NOL Carrybacks and the AMT

The addition and expansion of the Sec. 172(b)(1)(H) election has created numerous tax planning opportunities for corporations that have sustained NOLs; the ability to change the character of election-year ATNOLs creates an additional benefit of making this election.

Tax Implications of the Five-Year NOL Carryback

An extended carryback period of up to 5 years is available for NOLs generated in 2008 or 2009. The author reviews some of the practical issues that should be considered when deciding whether to take advantage of the extended NOL carryback period.

AMT Consequences of an Ownership Change

While most tax planning routinely contemplates the impact of the Sec. 382 limitation on the use of a corporation’s net unrealized built-in losses (NUBILs) following an ownership change, the corresponding impact of Sec. 56(g)(4)(G) for adjusted current earnings (ACE) is often overlooked and may have a significantly different effect than Sec. 382.

Intangibles Can Be Like-Kind Property

The IRS ruled that exchanged intangibles such as trademarks, trade names, mastheads, and advertiser and subscriber accounts may be eligible for like-kind exchange treatment.

Newsletter Articles

TECHNOLOGY

2018 tax software survey

Among CPA tax preparers, tax return preparation software generates often extensive and ardent discussion. To get through the rigors of tax season, they depend on their tax preparation software. Here’s how they rate the leading professional products.

DEDUCTIONS

Qualified business income deduction regs. and other guidance issued

The package includes final regulations, guidance on how to calculate W-2 wages, a safe-harbor rule for rental real estate businesses, and new proposed rules on the treatment of previously suspended losses.