This item focuses on the general taxation of debt instruments and provides an overview of the new reporting requirements and the implications they raise.
Gains & Losses
The IRS issued regulations to clarify the treatment of debt instruments that are part of a straddle.
Broker Basis Reporting of Debt Instruments and Options: Actions Holders or Issuers Must (or May Want to) Take
Buried in the regulations are optional or necessary actions to be taken in certain circumstances by holders of debt instruments, issuers of debt instruments subsequently registered with the SEC, and securities issuers that undertake organizational actions affecting the basis of specified securities.
The IRS released a draft of Form 8960, a new dual-purpose form that will be used by individuals and trusts and estates to compute the new 3.8% net investment income tax.
The IRS published a notice and request for comments from taxpayers on a new dual-purpose form that will be used by individuals and trusts and estates to compute the new 3.8% tax and then to report the tax.
The IRS issued final regulations defining “publicly traded property” to determine the issue price of a debt instrument.
The Supreme Court held that extended six-year statute of limitation for assessing a deficiency against a taxpayer where the taxpayer omits an amount in excess of 25% of gross income does not apply to a taxpayer’s overstatement of basis on a return.
The IRS postponed the basis and gain reporting rules under Secs. 6045(g), 6045(h), 6045A, and 6045B for debt instruments and options, so they will apply to those acquired on or after Jan. 1, 2014.
The Supreme Court affirmed that the extended six-year statute of limitation, which applies when a taxpayer “omits from gross income an amount properly includible” in excess of 25% of gross income, does not apply when a taxpayer overstates its basis in property it has sold.
The IRS released new Form 8937, Report of Organizational Actions Affecting Basis of Securities, and its instructions. The deadline for filing the form for 2011 is next Tuesday, January 17.
The Code provides a number of related-party exceptions designed to circumvent certain abuses, the most prevalent of which is basis shifting. This item discusses ways that practitioners can avoid basis-shifting problems.
The IRS issued final regulations regarding a new requirement for reporting of basis and other information by stockbrokers and mutual fund companies.
The IRS has finally provided a safe-harbor method to report gain or loss by taxpayers who are unable to complete a deferred like-kind exchange solely due to a qualified intermediary (QI) who defaults on its obligation to acquire and transfer replacement property.
Recent legislation lets taxpayers carry back a net operating loss (NOL) for a period of three, four, or five years. The IRS’s ability to make adjustments to the affected returns is an important consideration for taxpayers when deciding whether to make the carryback election and how many years to include.
Generally, a taxpayer may treat multiple trade, business, or rental activities as a single activity under the passive activity rules if the facts and circumstances indicate that they constitute an appropriate economic unit.
This item provides an overview of the structure of an exchange traded note and the current tax treatment of these instruments and an update on some of the guidance that has been issued related to taxation of ETNs