Under new Sec. 163(j), business interest expense deductions are limited, and a business interest expense that is disallowed in the current year is
carried forward to the succeeding tax year.
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TOPICS / CORPORATIONS
Income
State and local location incentives: Reminder that the rules have changed
The TCJA made a significant cange to the tax treatment of grants received from governmental entities, including location incentives for relocating or expanding existing facilities.
New Sec. 163(j): Considerations for real estate and infrastructure businesses
This discussion highlights the treatment of an “electing real property trade or business” for purposes of the interest expense deduction limitation of Sec. 163(j).
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.
Recognizing when the IRS can reallocate income
The IRS can take advantage of several rules to ensure related-party transactions do not result in tax evasion or an improper reflection on income.
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.
Sec. 163(j) places renewed importance on tax shelter status
The exemption to the limitation on business interest under Sec. 163(j) does not apply to a tax shelter prohibited from using the cash-receipts-and-disbursements method of accounting under Sec. 448(a)(3).
Federal tax reform: Not so encouraging for state and local incentives
Some incentives used by state and local governments to attract corporations will now likely be income to the recipient corporation.
IRS cannot recharacterize DISC commissions paid to Roth IRA
The IRS could not recharacterize, under the
substance-over-form doctrine, commissions paid by a DISC to two Roth IRAs as dividends..
Rev. Rul. 2016-15 and the Uniform Application of Sec. 108 to QRPBI
Real property developed and held by a taxpayer for lease in its leasing business is “real property used in a trade or business.”
IRS Updates Safe Harbor on Contributions to Capital for Transfers to Public Utilities
These transfers are considered a nontaxable contribution of capital by a nonshareholder to the utility.
Clarification of the Fair Market Value Calculation for the Discharged QRPBI Exclusion
Recently issued advice clarifies some of the rules regarding the limitations on the amount of the exclusion.
Debt Restructurings and Contingencies
This item addresses the tax consequences when a nonpublic, financially healthy company renegotiates a debt that was incurred to purchase the company’s assets, and the resulting new debt is contingent on the occurrence of future events.
Complexities of Stock Deals in M&A Transactions
Proper planning needs to take place to avoid the potential negative tax consequences and complexities of a taxable stock purchase.
Sec. 108(i): Considerations for Electing Consolidated Groups
The regulations under Sec. 108(i) provide
special rules for consolidated groups.
Sec. 163(I)’s “Substantial Certainty” Test and Related-Party Convertible Debt
This item summarizes the current law and discusses the facts and conclusion in Letter Ruling 201517003.
Application of Interest Charge for Installment Sale Obligations
As the merger and acquisition business continues to prosper, practitioners should be aware of the tax implications and compliance requirements of the interest charge on deferred tax under Sec. 453A that applies to certain installment sale obligations.
Foreign Corporations: Procedures and Pitfalls in Adopting and Changing Methods of Accounting for Purposes of Determining E&P
This item provides a high-level discussion of the general timing for certain foreign corporations’ adoption of methods of accounting for purposes of determining E&P, the procedural rules regarding how such foreign corporations change their method of accounting, and the importance of understanding when and how a method is adopted in light of the increased limitations such foreign corporations may face in changing methods.
Cancellation of Debt Income for Debtor Subsidiary Corporations
This item addresses the U.S. corporate income tax effects of cancellation of debt (COD) income; the contribution-to-capital exception to COD income; partial cancellation of COD income; the impact of insolvency; and, finally, some COD income issues to consider in the international corporate context.
CFC’s Software Leasing Income Determined to Be Foreign Personal Holding Company Income
The IRS addressed whether rental income from software leasing to third parties outside the country of a controlled foreign corporation is foreign personal holding company income.
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.
