IRS muddies the like-kind waters in guidance considering state law classification.
A document containing internal IRS advice released under the Freedom of Information Act considers four nonrecognition exchange situations where the issue is the weight to be given to how the property is classified under state law. The mixed bag of possible results flowing from the conclusions reached by the IRS are likely to undermine the certainty craved by taxpayers in Section 1031 transactions, as discussed in this Journal of Taxation article. (L.S. Weller, 118 Journal of Taxation 13 (January 2013).)
Final and Proposed Regulations coordinate overall domestic losses with overall foreign losses.
Revised ordering rules in final and Proposed Regulations eliminate the uncertainty that followed the expiration of Temporary Regulations. Taxpayers struggling with the interaction of the rules governing overall domestic losses and overall foreign losses now should have an easier time computing their foreign tax credits, as discussed in this Journal of Taxation article. (J.L. Rubinger, 118 Journal of Taxation 30 (January 2013).)
Notices 2012-39 and 2012-15: IRS use of Section 367 as an anti-repatriation provision.
The ability of U.S. corporations to find ways to bring home the earnings of their foreign subsidiaries without paying tax continues to trouble the IRS, as evidenced by two recent Notices that this Journal of Taxation article examines. The IRS's approach sometimes entails using parts of Section 367 in ways seemingly not contemplated by Congress when the provisions were enacted. (D.L. Forst and W.R. Skinner, 118 Journal of Taxation 18 (January 2013).)
Proposed Regulations radically overhaul 'tax opinion' and other rules in Circular 230.
This Journal of Taxation article discusses how the rules governing “practice before the IRS” extend beyond the literal application of that phrase and effectively apply to interactions between tax practitioners and their clients. The most recent proposals modifying those rules, when finalized, will bring welcome clarification and eliminate some unnecessary restrictions. (R. M. Lipton, 118 Journal of Taxation 6 (January 2013)).
Are major changes on the horizon for taxpayers using cost segregation?
This Journal of Taxation article discusses how the combination of an aggressive IRS attack on component depreciation and a taxpayer that essentially disappeared resulted in a substantial victory for the IRS. (J. M. Malloy, C. J. Langstraat, and J. M. Plecnik, 118 Journal of Taxation 36 (January 2013)).
Program-related investing in L3Cs: a question-and-answer guide.
This Journal of Taxation article discusses whether special-purpose LLCs are the best—or even appropriate—entity for a private foundation seeking to make program-related investments. (S. R. Chiodini and D. A. Levitt, 118 Journal of Taxation 41 (January 2013)).