Recapitalizations in which corporate debt is restructured or discharged are assuming a new prominence in the current economy.
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TOPICS
C Corporation Income Taxation
IRS Examines Treatment of Restructuring Costs
The IRS provided guidance on the treatment of costs related to investigating various corporate restructuring transactions that ultimately were not consummated.
Final Regs. on Consolidated Group Liquidations
Final regulations effective January 15, 2008, explain how the members of a consolidated group succeed to tax items, or “attributes,” of a subsidiary corporation when two or more members of the group own stock in the subsidiary and the subsidiary is liquidated on a tax-free basis
Maximizing the Benefits of Sec. 199 in an Asset Sale
This article addresses the opportunity to claim a Sec. 199 deduction when a business is sold in an asset sale or in a stock sale that is treated as an asset sale under a Sec. 338(h)(10) election.
Federal, State, and Local Tax Incentives for Environmental Remediation Costs
This item provides a high-level overview of the most common federal, state, and local tax incentives and a brief update of the federal rules regarding the expensing of environmental remediation costs.
Tax Treatment of Payments in Common Pharmaceutical Agreements
The Service outlined its position on the treatment of the various types of payments under pharmaceutical collaboration agreements in a coordinated issue paper.
Sec. 382 Ownership and Fluctuation in Value
For a corporation with more than one class of stock, the effects stock price fluctuations can play a significant role in determining whether use of the NOLs could become limited as a result of trading and other equity shifts.
Assumption of Liabilities in Taxable Asset and Sec. 338(h)(10) Acquisitions
One cannot assume that the tax treatment of liabilities will conform with financial reporting, and with stricter FIN 48 and Sec. 6694 standards it is more important than ever that tax advisers get it right.
Restricted Stock in Acquisitions: IRS Provides Much-Needed Guidance
Rev. Rul. 2007-49 provides valuable guidance in determining whether Sec. 83 applies to the receipt of restricted stock in taxable and tax-free reorganizations. However, many questions remain unanswered.
IRS Changes Its Position on Performance-Based Compensation for $1 Million Compensation Limit
The IRS ruled that an incentive plan is not performance-based compensation because it allows payments upon involuntary termination without cause by the employer, voluntary termination by the employee with good reason, or voluntary retirement regardless of whether the performance goals are met.
Revisions to 2007 Form 1120-F
The IRS has revised Form 1120-F, U.S. Income Tax Return of a Foreign Corporation, and related schedules, effective for filing periods ending on or after December 31, 2007.
IRS to Perform Mandatory Audits of Foreign Earnings Repatriation
The IRS LMSB Division has identified foreign earnings repatriation as a Tier I compliance issue, making it a mandatory examination item for those U.S. taxpayers selected for audit that have elected to repatriate foreign earnings under Sec. 965.
Interpreting SEC Schedules 13D and 13G for Sec. 382 Purposes
Sec. 382 requires a taxpayer corporation to track the ownership shifts among “5% shareholders.”
Uncertainty Governs Advance Trade Discounts
This article discusses conflicting court opinions and IRS guidance on advance trade discounts and the merits of treating them as purchase price adjustments instead of income or loans.
Final Regs. Issued on Corporate Reorganizations
The IRS has issued final regulations that provide guidance regarding the effect of certain transfers of assets or stock on the continuing qualification of transactions as reorganizations under Sec. 368(a).
FIN 48 Compliance: Disclosing Tax Positions in an Age of Uncertainty
FIN 48 presents new challenges for taxpayers, auditors, and tax advisers. The disclosures required by the interaction of FAS 109 and FIN 48 will result in greater public disclosure of tax planning techniques, including the strengths and weaknesses of those techniques.
Accounting Period Changes Affecting CFCs and Corporations Exiting a Consolidated Group
The IRS has modified the scope provision for corporations that exit a consolidated group and request consent to change their annual accounting periods.
Cash Settlement and Note from Investment Adviser Are Qualifying RIC Income
The IRS ruled that a regulated investment company’s receipt of cash and a note from its investment adviser are qualifying income under Sec. 851(b)(2).
Significant Recent Corporate Developments
This article summarizes selected income tax developments during the past year affecting corporations, including those that file consolidated returns.
Transfers of Personal Goodwill in the Sale of a Closely Held Business
The Tax Reform Act of 1986, P.L. 99-514 (TRA ’86), changed the tax landscape in many ways. It created passive activities and at-risk limitations, eliminated many itemized deductions, and changed tax rates. However, from a business acquisition standpoint, the most important change was the repeal of the General Utilities doctrine.
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