The Fourt Circuit affirmed the Tax Court’s decision that a taxpayer could not ignore the coordination rule in Sec. 45C(c)(2) when calculating the Sec. 41 research credit for a tax year in which the taxpayer claimed the Sec. 45C orphan drug credit for qualified clinical testing expenses that also were qualified research expenses for purposes of the research credit.
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TOPICS
C Corporation Income Taxation
Choice-of-entity analysis with the TCJA sunset approaching
Educators as well as practitioners can model the tax effects of choice of entity and possible scenarios of tax law change.
The CHIPS Act’s advantageous direct-pay election
This article summarizes the key features of the direct-pay election for the advanced manufacturing credit, which allows taxpayers to treat the credit as a direct payment against their federal income tax.
Intangible property repatriation rules finalized
The regulations terminate the continued application of the Sec. 367(d) annual inclusion in certain cases when intangible property is repatriated to the United States after previously being transferred to a foreign corporation.
Exposing the hidden disqualified individuals of Sec. 280G
Potential denial of a deduction for the corporation and an excise tax on individuals receiving “excess parachute payments” could pose a hazard as a company approaches a change in control.
ERC supplemental claim process opened for third-party payroll companies
The IRS announced that it will open a supplemental claim process to help third-party payers and their clients resolve incorrect claims for the employee retention credit. The deadline is Nov. 22.
Corporate AMT proposed regulations issued; some penalties waived
The IRS issued proposed regulations providing guidance on the corporate alternative minimum tax (AMT) and a notice that waives the penalty for failure to pay estimated tax with respect to the corporate AMT for 2024.
Like-kind exchanges of real estate: Back to basics
This article discusses the requirements for gain deferral under Sec. 1031 and highlights frequently encountered issues.
Complying with the SRLY rules
Strategies for ameliorating limitations on carryovers by members of a consolidated group may include amending a corporation’s ownership structure.
Lenders’ tax consequences of foreclosure
Third-party creditors holding defaulting loans need to understand calculating gain or loss and whether it is ordinary or capital in foreclosure and deed-in-lieu of foreclosure proceedings.
Mandatory repatriation tax is constitutional
In Moore, the Supreme Court rebuffed a challenge to the one-time Sec. 965 tax on undistributed earnings of controlled foreign corporations attributed to U.S. shareholders.
A process of experimentation: Production expenses for the R&D tax credit
When claiming research and development tax credits, a taxpayer may be able to include production activities in the “substantially all” calculation by presenting detailed evidence that those production activities constitute a process of experimentation under Sec. 41(d)(3)(A).
FinCEN uses TV ad to tell businesses about BOI
The PSA uses a chat between friends in a coffee shop to educate small businesses about beneficial ownership information reporting, which 32.6 million businesses must file.
BOI requirements roll along despite concerns about too little outreach
FinCEN, which oversees beneficial ownership information reports, has received just 2.7 million of the 32.6 million reports that it expects. Through June, FinCEN said, it has reached more than 90,000 stakeholders.
Advances between affiliated entities: An uphill but winnable battle for loan characterization
Whether a purported loan between affiliated or commonly controlled entities will be recharacterized as equity can depend on the 13 Mixon factors.
Sec. 163(j) planning considerations
Businesses can explore several options to mitigate the interest deduction limitation under the Tax Cuts and Jobs Act.
FinCEN estimates millions of hours will be spent seeking BOI access
Almost 16,000 entities will spend over 8.7 million hours seeking access to beneficial ownership information in the first year, FinCEN estimated in a new notice.
Final regs. issued for 1% excise tax on corporate stock repurchases
The final regulations provide guidance regarding the reporting and payment of the excise tax on repurchases of corporate stock made after Dec. 31, 2022.
Recapture considerations for Inflation Reduction Act credits
The Inflation Reduction Act not only created $663 billion in new energy-related credits over 10 years, but it also expanded opportunities to monetize many of the energy tax credits through direct payment and transfer elections.
Avoiding passive loss limitations on rental real estate losses
Strategies for using the $25,000 offset for rental real estate losses can include keeping income within its phaseout range and contributing the loss activity to a closely held C corporation.
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.
