Qualifying for like-kind exchange treatment becomes more complicated if the property exchanged is “underwater”—that is, the debt on the property exceeds its fair market value.
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TOPICS / CORPORATIONS
Gains & Losses
IRS Not Allowed to Reclassify Passive Activity Income
The Tax Court held the IRS could not reclassify the taxpayer’s income from the rental of cellphone towers and the land they were situated on to his wholly owned S corporation as nonpassive income under the self-rental rule.
Changes to Rules on Failure to File Gain Recognition Agreements Proposed
The IRS issued proposed regulations to update the rules that apply to U.S. taxpayers that fail to file gain recognition agreements when they transfer certain property to foreign corporations in nonrecognition transactions
State Law Property Classifications Do Not Control “Like Kind” Determination
The IRS ruled that state law property classification does not control whether exchanged properties are considered of “like kind” for purposes of Sec. 1031.
Regs. Issued on Integrated Hedging Transactions of Qualifying Debt
The IRS published regulations addressing certain integrated transactions that involve a foreign currency denominated debt instrument and multiple associated hedging transactions.
Current Developments in S Corporations
During the period of this S corporation tax update, some major changes that directly affect S corporations took place. This article also presents tax planning ideas for S corporations and their shareholders.
Corporate Equity Reduction Transaction Guidance Issued
The IRS issued proposed regulations governing the availability of NOL deductions that are attributable to corporate equity reduction transactions.
Deducting Losses on Worthless Investment Securities
Understanding the rules for deducting losses on worthless securities is necessary to determine the correct timing of the loss deduction.
Corporate Financing Companies: Treatment of Losses
Financial blocker entities are used as a mechanism to prevent funds from potentially being engaged in a U.S. trade or business.
Federal Income Tax Treatment of Certain Transferable State Tax Credits
The emergence of online marketplaces and auction houses has provided a single point of contact for both sellers and buyers, making sales and purchases of transferable state tax credits more common.
Taxing the Transfer of Debts Between Debtors and Creditors
Assumptions and other transfers of debt between corporations and shareholders or between partnerships and partners can often be tax free as part of a contribution, distribution, reorganization, or liquidation. This article analyzes several types of debt transfers and their potential for recognition of gain or loss and income from cancellation of debt.
Sidestepping Deferred Intercompany Gain
This item illustrates how transfers of items outside a U.S. consolidated group can trigger a deferred intercompany gain and suggests ways to avoid that result in certain situations.
Intercompany Debt in a Deemed Asset Sale Election
This item discusses IRS guidance illustrating the impact of extinguishment of intercompany debt immediately preceding a Sec. 338(h)(10) election.
Sec. 6045B Reporting Requirements
Sec. 6045B requires an issuer of a specified security to report certain information to the IRS and to its shareholders following an organizational action that affects the basis of a specified security.
The S Corporation Built-In Gains Tax: Commonly Encountered Issues
This article examines five issues corporations commonly encounter in complying with the built-in gains tax.
Losses Related to an Insolvent Corporation
The IRS issued a general legal advice memorandum that addressed the tax consequences when an insolvent foreign subsidiary of a domestic U.S. corporation elected to be classified as a partnership.
Proposed Sec. 382 Regs. Simplify Small Shareholder Treatment
Sec. 382 and the regulations thereunder rank among some of the most complex, nonintuitive rules in federal tax law, all aimed at curbing the practice of trafficking in NOLs, or other loss attributes, in a corporation.
Prop. Regs. Require NUBIG and NUBIL Redetermination for Consolidated Sec. 382 Purposes
The IRS recently proposed revisions to the consolidated return regulations on the application of Sec. 382 and calculation of net unrealized built-in gains and losses.
Recognized Built-In Loss Is Subject to Sec. 382 Limitation
The IRS concluded that a taxpayer may include in its computation of taxable income or NOL only an amount of recognized built-in loss (RBIL) equal to its Sec. 382 limitation, whether or not the taxpayer has taxable income without regard to RBIL.
Net Operating Loss and Unrealized Investment Gain Tax Provision Benefit
This item reviews an anomalous situation that occurs in some cases under ASC ¶740-20-45-7 for entities generating NOLs with an investment portfolio.
PRACTICE MANAGEMENT
2026 tax software survey
CPAs rate their return preparation software’s performance during this year’s tax season.
