The IRS recently proposed revisions to the consolidated return regulations on the application of Sec. 382 and calculation of net unrealized built-in gains and losses.
Gains & Losses
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.
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.
This item reviews an anomalous situation that occurs in some cases under ASC ¶740-20-45-7 for entities generating NOLs with an investment portfolio.
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.
FIRPTA is quite complex and filled with traps for the unwary, especially in the area of return of capital distributions.
The IRS issued proposed regulations on the time for taking into account deferred losses on the sale or exchange of property between members of a controlled group (REG-118761-09).
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.
By exercising its setoff authority, the IRS has been able to achieve the same limitation period in Form 1120X carryback situations as in tentative refund cases with Form 1139.
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.
The IRS recently signaled its increasing interest in the tax treatment of hedging transactions, particularly with regard to proper taxpayer identification.
The IRS issued proposed regulations on the time for taking into account deferred losses on the sale or exchange of property between members of a controlled group.
Do not forget to consider the tax accounting method rules (for accrued income or expense items) when dealing with Sec. 382.
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.
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.
The IRS has issued guidance on the expanded five-year net operating loss (NOL) carryback rules, which were amended by the Worker, Homeownership, and Business Assistance Act.
This article discusses selected developments in U.S. federal income taxation of corporations and consolidated groups during 2009.
The Worker, Homeownership, and Business Assistance Act of 2009 contains a handful of tax provisions. These include changes to the first-time homebuyers’ credit, increased NOL carrybacks for small businesses, and mandatory e-filing for most tax return preparers.
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.
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.