This discussion provides a high-level overview of the affiliated service group rules.
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TOPICS / CORPORATIONS
Income
Application of new life insurance reportable policy sale rules to M&A transactions
Recently issued proposed regulations on the transfer of life insurance contracts create significant uncertainty regarding their application to tax-free asset acquisitions.
Limiting business interest expense
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.
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.”
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.
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.
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.
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.
INDIVIDUALS
Current Developments in Taxation of Individuals: Part 1
This update surveys recent federal tax developments involving individuals, including court cases, rulings, and guidance issued during the six months ending October 2025.
