The IRS finalized proposed regulations to update the rules that apply to U.S. taxpayers that fail to file gain recognition agreements when they transfer certain property to foreign corporations in nonrecognition transactions.
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TOPICS / CORPORATIONS
Gains & Losses
Caution: Sec. 1234A May Apply to an Abandonment Loss
Change the character of a loss from ordinary to capital, and a taxpayer runs the risk of deferring or even failing to realize a tax benefit. While the general rules regarding characterization of gains or losses are well-known, more obscure statutory provisions can change an otherwise ordinary gain or loss into a capital gain or loss.
Like-Kind Exchange Rules: Continued Evolution
For many years, taxpayers have been able to defer recognition of gain on the disposition of assets by engaging in Sec. 1031 like-kind exchanges. Consequently, many questions and issues surrounding these transactions have been addressed, but many cases and rulings continue to arise each year. This article analyzes these cases and rulings and identifies questions that still need to be answered.
Cost Basis Denied Due to Failure to Meet the All-Events Test
The Court of Federal Claims denied approximately $1.6 billion in cost basis related to decommissioning liabilities assumed in connection with the purchase of three nuclear power plants.
IRS Finalizes Regs. Addressing Limitations on Transfers of Built-In Losses
The IRS issued final regulations under Sec. 362(e)(2) that provide guidance on the determination of the bases of assets (including stock) transferred in certain nonrecognition transactions to which Sec. 362(e)(2) limitations on built-in losses apply.
Sec. 631(b) and the Taxation of Standing Timber Sales
Under Sec. 631(b), gains or losses from the sale of standing timber are considered gains and/or losses from the sale of business use property.
Qualified Small Business Stock: An Opportunity for Tech Startups
The existence of convertible debt, incentive stock options, warrants, and preferred stock, along with the need for additional capital, creates opportunities for tech companies to issue additional qualified small business stock in 2013.
ATNOLs and Charitable Contribution Carryovers: Which Takes Precedence?
The uncertainty surrounding the ordering rules of the 10% limit on the charitable deduction and the 90% limit on the ATNOL deduction has been affecting more corporate taxpayers as the economy recovers and these corporations start generating current-period taxable income.
NOL Carrybacks Limited by Excess Distributions
While practitioners typically think of the application of the CERT rules in cases of debt-financed distributions or stock acquisitions, the rules could apply even if the underlying transaction is not debt-financed.
IRS Issues Final Rules on Exceptions From REIT or RIC Built-in Gain Recognition
The IRS issued final regulations that provide guidance on the recognition of built-in gain in certain transfers of property from a C corporation to a RIC or REIT.
Failing Subchapter C Requirements to Avoid Nonrecognition Treatment
If a transaction satisfies the substantive tests for certain subchapter C nonrecognition provisions, can the taxpayer nonetheless achieve a taxable exchange by intentionally violating procedural requirements?
Underwater Property and Like-Kind Exchanges
Qualifying for like-kind exchange treatment becomes more complicated if the property exchanged is “underwater”—that is, the debt on the property exceeds its fair market value.
Changes to Rules on Failure to File Gain Recognition Agreements Proposed
The IRS issued proposed regulations to update the rules that apply to U.S. taxpayers that fail to file gain recognition agreements when they transfer certain property to foreign corporations in nonrecognition transactions
State Law Property Classifications Do Not Control “Like Kind” Determination
The IRS ruled that state law property classification does not control whether exchanged properties are considered of “like kind” for purposes of Sec. 1031.
Regs. Issued on Integrated Hedging Transactions of Qualifying Debt
The IRS published regulations addressing certain integrated transactions that involve a foreign currency denominated debt instrument and multiple associated hedging transactions.
Corporate Equity Reduction Transaction Guidance Issued
The IRS issued proposed regulations governing the availability of NOL deductions that are attributable to corporate equity reduction transactions.
Deducting Losses on Worthless Investment Securities
Understanding the rules for deducting losses on worthless securities is necessary to determine the correct timing of the loss deduction.
Corporate Financing Companies: Treatment of Losses
Financial blocker entities are used as a mechanism to prevent funds from potentially being engaged in a U.S. trade or business.
Federal Income Tax Treatment of Certain Transferable State Tax Credits
The emergence of online marketplaces and auction houses has provided a single point of contact for both sellers and buyers, making sales and purchases of transferable state tax credits more common.
Taxing the Transfer of Debts Between Debtors and Creditors
Assumptions and other transfers of debt between corporations and shareholders or between partnerships and partners can often be tax free as part of a contribution, distribution, reorganization, or liquidation. This article analyzes several types of debt transfers and their potential for recognition of gain or loss and income from cancellation of debt.
employee benefits & pensions
Profits interests: The most tax-efficient equity grant to employees
By granting them a profits interest, entities taxed as partnerships can reward employees with equity. Mistakes, however, could cause challenges from taxing authorities.
