Passive Activity

News & Analysis as of

Final IRS Regulations Clarify That Certain Solar Assets May Qualify as Real Property for REIT Purposes

On August 30, 2016, the IRS issued final regulations that clarify and expand the definition of "real property" for purposes of qualifying as a real estate investment trust (REIT). The final regulations substantially follow...more

Investors Beware: The Bar Is Being Raised on HSR Violations

Under the Hart-Scott-Rodino (HSR) Act, parties to transactions meeting certain size thresholds are required to notify the Antitrust Division of the U.S. Department of Justice and the Federal Trade Commission and to observe a...more

When the Internal Revenue Code and the FAA Regulations Collide - What Results?

The Federal Aviation Administration (FAA) categorizes aircraft owners and operators into different categories. In general, the FAA grants an owner of an aircraft who operates the aircraft for personal use and enjoyment a...more

Development of the practice of charging the person beneficially entitled to income additional tax when income is paid to foreign...

On 11 July 2016 the Commercial Court of Moscow rendered a decision in case No. ?40-442/15-39-2 under the claim of Credit Europe Bank CJSC (the “Bank”). That decision is yet another judgment on the subject of applying the...more

Can a shareholder who is unable to rely on the HSR passive investor exemption still file a Schedule 13G? Maybe, says the SEC Staff...

On July 12, 2016, the US Department of Justice announced a record $11 million fine against an activist investment firm for improperly claiming an exemption from Hart-Scott-Rodino’s notification and waiting period provisions...more

Limited Liability Company Member Not an Employer Under NC Wage and Hour Act

The North Carolina Wage and Hour Act imposes liability on employers for failure to pay promised wages. The law is modeled after the federal Fair Labor Standards Act, and like the FLSA, individual managers and officers of a...more

FTC Raises Maximum Potential Hart-Scott-Rodino Civil Penalties to $40,000 per Day, an Increase of 150 percent

On June 29, 2016, the Federal Trade Commission (FTC) announced new maximum potential civil penalties for violations of various competition and other laws enforced by the FTC, including the Hart-Scott-Rodino Antitrust...more

Court Finds All of a Taxpayer’s Work for His Employer to be Personal Services in a Real Estate Business

The U.S. District Court for the Western District of Arkansas recently held that all of a taxpayer’s work for his employer, a property management company, counted toward the taxpayer’s satisfaction of the material...more

Weekly Update Newsletter - October 2015 #2

GOVERNMENT CONTRACTS - Federal Acquisition Regulation: Simplified Acquisition Threshold for Overseas Acquisitions - The Department of Defense, General Services Administration, and NASA have issued a proposed rule to...more

Commenters Weigh in on Proposed Regulations for Determining MLP Qualifying Income

IRS’ proposed MLP regulations generate flurry of specific industry-related comments and spur public hearing. “I’m mad as Hell, and, frankly, I’m not going to take it anymore.” — Paraphrase of concerned citizen and...more

Latest H-S-R Act Enforcement Is a Cautionary Tale for Minority Investors

Generally speaking, stock purchases which will cause an investor to hold more than $76.3 million of the target’s voting securities may require a pre-closing notification under the Hart-Scott-Rodino (“H-S-R”) Act. But there...more

FTC Cautions Against Improper Reliance on “Investment-Only” Exemption

Investment manager Third Point LLC and three of its affiliated funds have entered into a proposed settlement agreement with the federal antitrust authorities for violations of the Hart-Scott-Rodino Antitrust Improvements Act...more

Master Limited Partnerships: Proposed Tax Regulations Scale Back Activities Giving Rise to Qualifying Income

The Treasury Department (Treasury) and the Internal Revenue Service (Service) have issued proposed tax regulations (Proposed Regulations) that provide guidance on, and significantly scale back, the types of activities...more

Publicly Traded Partnership Proposed Regulations

Widely held partnerships are a significant source of funding for oil, gas and certain natural resources projects, but the publicly traded partnership (“PTP”) rules can cause such partnerships to be treated as corporations for...more

IRS Publishes Proposed Regulations for Hedge Fund Reinsurance Arrangements

In April 24’s Federal Register, the IRS released proposed regulations (REG-108214-15) to restrict when a foreign insurance company’s income can be excluded as passive income by giving a more strict definition for the “active...more

Court Holds Taxpayer is Partner for Self-Employment Tax After Election Out Of Subchapter K

The Tax Court recently ruled that a taxpayer was liable for self employment tax based on its status as a partner, even though the partnership had elected out of the partnership tax rules....more

SBICs Given Additional Flexibility to Structure Their Investments

Summary - The Small Business Administration (SBA) adopted revisions to its regulations, loosening its prohibition on small business investment companies (SBICs) investing in passive businesses. Under the revised...more

Proposed Anti-Inversion Regulations Would Affect Foreign Insurers

For decades American companies have used so-called “corporate inversions” to lower their tax burdens on foreign-earned income. Typically, the American company is acquired by a foreign company located in a tax-favorable...more

SBIC Client Alert: Changes to Passive Business Rule

Earlier this week, the revised and final “Passive Business Rule” (13 CFR 107.720(b) of the Small Business Investment Act of 1958, as amended) was released by the U.S. Small Business Administration (the “SBA”)...more

In Frank Aragona Trust, Tax Court Holds that Trustees’ Activities as Employees Count for Purposes of Material Participation Under...

The issue of whether a trust has passive or non-passive income from its investment in a pass-through entity has taken on increased importance in light of the tax imposed on net investment income under Code Section 1411 of the...more

Tax Planning for the Privatization of the Space Industry

The privatization of the space industry has seen dramatic growth in recent years, and it appears that more significant developments are on the horizon....more

High Net Worth Family Tax Report, Vol. 9, No. 1

In This Issue: - Congressman Camp Camp Releases His Long-Awaited Tax Reform Plan - Tax Court Addresses Valuation Issues Related to Tax on Built-In Corporate Gain - Shareholder of S Corporation Required to Include...more

Participation of 100 Hours May Be Sufficient to Generate Active Income Exempt from the 3.8 Percent Health Care Tax on Net...

As business owners begin filing their 2013 federal income tax returns and pay the 3.8 percent tax on net investment income for the first time, they should be aware that 100 hours of participation in an activity may be...more

High Net Worth Family Tax Report, Vol. 8. No. 4 -- December 2013

IRS Explains Federal Tax Consequences of Windsor Case Regarding Same-Sex Marriages - In our last report (Vol. 8, No. 3, September 2013), we told you about the recent Windsor case, in which the Supreme Court held...more

Power Tactics for Dealing with Passive Aggressive People

Be Straight Forward and Stay Assertive - We have all had our bouts with passive aggressive people. You know the kind. Passive aggressors use indirect tactics to needle you and make you downright mad. And then, when you...more

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