Blog Posts Tagged With Tax Regulatory Developments

Subscribe to Tax Regulatory Developments RSS Feed

IRS and Treasury Release the 2017-2018 Priority Guidance Plan

The IRS and Treasury released their 2017-2018 Priority Guidance Plan last Friday, outlining their priorities and corresponding projects they hope to complete from July 1, 2017 to June 30, 2018.

In pursuit of their headline priority to “identify and reduce regulatory burdens,” the IRS and Treasury singled out a number of the Obama Administration’s major regulatory packages for removal or modification. To give a few examples, the Propriety Guidance Plan highlights the Section 707 and 752 regulations that were issued last year (re: the treatment of liabilities in disguised sales and recourse partnership liabilities), the Section 367 regulations with respect to the transfer of goodwill and going concern value, the §987 qualified business unit proposed regulations and the §337 regulations with respect to the transfer of property to RICs and REITS, in addition to the Section 385 documentation rules, which Treasury already modified in part through the issuance of Notice 2017-36.
Continue Reading

Treasury Considers Revoking Documentation, Disguised Sale Rules

The Treasury Department this morning released a report proposing the revocation or revision of eight significant Obama-era regulations.  Among other proposals, the Treasury Department is considering revoking the “documentation rule” promulgated under Section 385 and the regulations changing the allocation of partnership liabilities for purposes of determining whether a disguised sale has occurred.  The “bottom dollar” guarantee rules for partnership liabilities would be retained, however, as would the “per se” rule of the Section 385 regulations, at least for now, pending tax reform.   Additional proposals include providing an exception to the new Section 367 regulations for transfers of foreign goodwill and going concern value in situations unlikely to be abusive and providing additional time and flexibility for the implementation of new rules under Section 987.
Continue Reading

Court Invalidates Serial Acquiror Inversion Rule

As we await the release of the Treasury Department’s recommended revisions to certain significant Obama-era regulations, a court has struck down perhaps the most controversial of the regulations issued during President Obama’s tenure: the anti-inversion temporary regulation that frustrated the Pfizer-Allergan combination. As we described in a recent client memorandum, the District Court for the Western District of Texas invalidated the temporary regulation that excluded certain recent acquisitions of U.S. companies by the non-U.S. party to a potential inversion transaction in calculating the “ownership fraction,” which had the effect of reducing the size of the non-U.S. party and thus of making it more difficult to satisfy the requirements of Section 7874.
Continue Reading

Great Unwinding? Process for Regulatory Repeal

President-elect Trump and Congressional Republicans have pledged to aggressively roll back regulations issued by the Obama Administration, including tax rules. In this post, we consider the paths Republicans might take in pursuing their agenda. In general, alternatives for repeal will depend on how recently rules were issued and whether such rules are regulations or less formal guidance.

Final regulations not yet published in Federal Register.  Final regulations do not become effective until they are published in the Federal Register, and publication typically does not occur until weeks after regulations are approved by the relevant agency. Shortly after assuming office, an incoming President typically issues an executive order suspending all unpublished final regulations for review by the new administration.
Continue Reading

Accumulated Earnings Tax Guidance: Is IRS Anticipating Lower Corporate Rates?

The IRS recently issued guidance applying the accumulated earnings tax, a rarely imposed penalty that could take on increased importance if the tax rates proposed by the Republican “Blueprint” for tax reform are enacted.

The accumulated earnings tax is a 20% surcharge on the taxable income of a corporation formed or availed of for the purpose of avoiding shareholder taxes by permitting corporate earnings to accumulate rather than being distributed. As discussed below, the significance of the accumulated earnings tax was diminished in the 1980s when individual tax rates were lowered so as to align more closely with corporate rates, reducing the incentive to defer taxation at individual rates.
Continue Reading

Setting the Stage for Comprehensive Tax Reform

Tax reform will be one of the top priorities for the 115th Congress. Hopes for pursuing tax reform to a successful conclusion are high, given one-party control of the government (and exuberant campaign promises). Following the 2016 election, Davis Polk laid out the background and context in which tax reform measures will be considered, with links to summaries of the leading proposals and details on the politics of tax reform. Although life in Washington has moved forward since this memo was published, the key points and players remain the same. Read on for things to watch.

Setting the Stage for Comprehensive Tax Reform, December 2, 2016

Continue Reading