The Coronavirus Aid, Relief, and Economic Security Act (CARES Act, H.R. 748) included changes to the federal income tax loss (NOL) carryforward provisions under Section 172 of the Internal Revenue Code. One of the significant...more
Whether you are in the process of an equity transaction in 2020 or completed one in 2018 or 2019, you may have significant federal income tax planning opportunities. ...more
In order to take a worthlessness deduction for an equity investment in an entity, including an equity interest in a corporation or a partnership, the taxpayer must show that the instrument is worthless (no value at all), and...more
In April 2019, the IRS’s Large Business and International Division (LB&I) issued an LB&I Transaction Unit (LTU) that described potential positions a taxpayer may take to recover previously capitalized transaction costs....more
Taxpayers typically incur significant transaction costs when undergoing a transaction involving a restructuring, acquisition, disposition, sale of assets, or sale of stock. The default rule under section 263 is that all...more
The treatment of transaction costs in the context of a transaction involving a partnership that is either the acquiring entity or the target entity raises unique issues....more
The tax treatment of costs incurred in a transaction can represent a significant deduction for the taxpayers involved. Even in the case of a corporation that is now taxed at the corporate rate of 21 percent, the deduction for...more
The Tax Cuts and Jobs Act (2017 Tax Act) significantly modified the treatment of certain deductions for many business taxpayers, including partners and partnerships....more
Can your company unlock the value of net operating loss carryforwards to reduce future taxable income?
Originally published in Tax Executive, the professional journal of Tax Executives Institute - January/February 2018....more
2/5/2018
/ Business Taxes ,
Corporate Taxes ,
Income Taxes ,
Net Operating Losses ,
New Legislation ,
Tax Cuts and Jobs Act ,
Tax Deductions ,
Tax Planning ,
Tax Rates ,
Tax Reform ,
Trump Administration
In a new 18-month pilot program, the IRS is temporarily opening up a previous no-rule policy with respect to certain issues arising in a distribution by a corporation to its shareholders under Section 355....more
Many routine transactions occur between related parties, including the payment or accrual of interest on indebtedness, license fees, salary or benefits to employees and/or shareholders, and trade invoices. The Tax Court...more
7/27/2017
/ Employee Benefits ,
ESOP ,
Income Taxes ,
Internal Revenue Code (IRC) ,
IRS ,
Payroll Records ,
Related Parties ,
S-Corporation ,
Shareholders ,
Tax Deductions ,
Tax Returns
While the Internal Revenue Service (IRS) has continued to issue guidance addressing the ability to deduct transaction costs, the doctrine of "Origin of the Claim" (OOC) developed over 50-plus years of case law is still the...more
California requires taxpayers that have income within and outside the state to "apportion" their overall income between the two categories based upon certain factors and rules for determining their California tax liability....more
Section 385 Proposed Regulations — Impact on Related-Party Financing -
Section 385 has been in the Internal Revenue Code since 1969. It was enacted to provide guidance for whether to classify an interest in a corporation...more
12/13/2016
/ Audits ,
Bifurcation ,
Change of Ownership ,
Debt ,
Debt Instruments ,
Device Test ,
Equity ,
Expanded Group Instruments (EGIs) ,
Income Taxes ,
Internal Revenue Code (IRC) ,
IRS ,
Net Operating Losses ,
Partnerships ,
REIT ,
Revenue Procedure 2016-40 ,
Safe Harbors ,
Section 355 ,
Section 385 ,
Stocks ,
Tax-Free Spin-Offs
The active trade or business rules are detailed and highly fact specific, and the IRS continues to refine its view on the qualification requirements.
In order to separate two businesses housed in one corporation or in a...more
Two recent cases illustrate the IRS’ ability to successfully argue that taxpayers should not benefit from their own mistakes if they result in less tax being paid.
Two recent cases highlight the most current view of the...more
The recent guidance under section 355 is a significant attempt by the IRS to clarify in a formal way what it historically has been able to do on a case-by-case basis through the private letter ruling process....more
On June 10, 2016, the Internal Revenue Service released a Chief Counsel Memorandum dated July 8, 2015, addressing the issue of whether a target S-corporation, which participated in a transaction in which the parties made a...more
Changes to the formula for determining the long-term tax-exempt rate used in a section 382 limitation calculation after a company undergoes an ownership change may lower the amount of net operating losses the company can use...more
Detailed recordkeeping and documentation assembling a factual and business narrative relating to the relevant services and associated fees are important to the allocation of costs.
For many decades, taxpayers and the...more