The IRS announced its intention to issue regulations that will identify certain stock of a foreign corporation that is to be disregarded for determining foreign corporation ownership under the requirements of Sec. 7874
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TOPICS
C Corporation Income Taxation
Court of Federal Claims Upholds LILO Transaction
The Court of Federal Claims held that a lease-in, lease-out (LILO) transaction involving a Dutch power plant undertaken by a New York utility company was a valid business transaction that had economic substance.
Significant Recent Corporate Developments
This article discusses selected developments in U.S. federal income taxation of corporations and consolidated groups during 2009.
LMSB Identifies New Repairs Issue
In an IRS Large and Mid-Size Business (LMSB) Division memorandum (LMSB-4-0509-019), the IRS notified LMSB executives of an emerging issue relating to the recharacterization of costs associated with tangible assets previously capitalized under Sec. 263(a) as currently deductible repairs under Sec. 162.
Grants in Lieu of Business Energy Credits
The American Recovery and Reinvestment Act of 2009 included the option to receive a cash grant in lieu of taking the business energy credit for taxpayers who place in service specified energy property.
Charitable Contribution of Qualified Conservation Easement
The Tax Court held that a conservation easement of air space over an historic structure that was donated by a taxpayer to a nonprofit organization did not meet the requirements to be considered a qualified conservation easement.
Determining Basis in Tax-Free Acquisitions
Mergers and acquisitions are often a significant component of the growth strategies for many companies. CPAs who support these activities can help acquiring companies decide whether to buy the assets of the target corporation or acquire its stock.
Electing to Accelerate AMT and Research Credits in Lieu of Bonus Depreciation
The Housing Assistance Tax Act of 2008 allows corporations to make an election to forgo bonus depreciation and instead claim an accelerated pre-2006 research and/or AMT credit.
Proposed Regs. Would Simplify Reduced Research Credit Election
On July 15, the IRS released proposed regulations that simplify the procedures for taxpayers claiming the reduced research credit under Sec. 280C(c)(3) (REG-130200-08).
IRS Further Clarifies WOTC “Disconnected Youth” Definition
The IRS released a notice defining the terms “unemployed veteran” and “disconnected youth” for purposes of the Sec. 51 work opportunity tax credit.
Sec. 162(m)(5) Implications for TARP Recipients
The Emergency Economic Stabilization Act created Sec. 162(m)(5) to impose strict limitations on the deductibility of certain executive remuneration.
AMT Consequences of an Ownership Change
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.
Treatment of Grants as Nonshareholder Contributions to Capital
Corporations are generally exempt from tax on contributions made to corporate capital.
Intangibles Can Be Like-Kind Property
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.
Merger Termination Fee Deductible
The Tax Court held that a termination fee paid by the taxpayer to cancel a merger agreement in order to consummate a more lucrative merger was deductible.
Debt Restructurings in Today’s Private Equity Environment
Deals that are taking place today bring with them many technical tax considerations that were seen much less frequently during robust economic times.
Deferring Shareholder Gain by Distributing Installment Notes
When a C corporation sells some or all of its assets during the process of liquidation and takes back one or more installment notes as payment, it must recognize, in the year of liquidation, all unrecognized gains on installment receivables distributed to the shareholders (Secs. 336 and 453B(a)).
Tax Planning for Troubled Debt
Today’s volatile real estate environment presents interesting opportunities for investors and developers to alter the terms of their debts in ways that may pay off if they can retain control of their projects.
IRS Notice Provides Work Opportunity Tax Credit Definitions
The IRS has released a notice that defines the terms “unemployed veteran” and “disconnected youth” for purposes of the Sec. 51 work opportunity tax credit.
Should a Company Elect to Defer Cancellation of Debt?
The American Recovery and Reinvestment Act of 2009 provides certain business debtors with a cancellation of debt (COD) income deferral election under new Sec. 108(i) for reacquisitions by the debtor or by certain related parties of applicable debt instruments after December 31, 2008, and before January 1, 2011.
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