Under Sec. 110, certain businesses that are tenants of a retail space may exclude from gross income amounts received from the lessor of the space to construct or improve real property used in the taxpayer’s trade or business. This safe harbor applies where the lease is for 15 years or
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TOPICS / TAX
Business tax
Goodwill not distributed to sole shareholder
The Tax Court finds that a family trucking business did not distribute appreciated intangible assets under Sec. 311(b). The Tax Court held that a trucking company’s alleged goodwill was personally owned by its sole shareholder, and therefore the trucking company had no goodwill asset to transfer. Because goodwill was not
Giant Eagle’s advance deductions grounded
No deduction or gross profit offset is allowed for discounts offered on future fuel purchases by customers under a customer loyalty program. The Tax Court held that a taxpayer was not entitled to deduct the estimated future cost of fuel discounts earned by its customers until those discounts were redeemed.
IRS signals PPACA compliance issues for 2015
This month, the IRS made several updates to the Internal Revenue Manual (IRM) that provide insight on the notices and enforcement methods the Service will use next tax season to ensure taxpayers comply with the Patient Protection and Affordable Care Act (PPACA), P.L. 111-148. Most compliance efforts focus on the
Doctors lack standing to challenge delay of employer mandate
The Seventh Circuit affirmed the dismissal of a suit objecting to the IRS’s decision to delay imposing the Sec. 4980H employer mandate penalty until 2015 (Association of American Physicians and Surgeons, Inc., No. 14-2123 (7th Cir. 9/19/14), aff’g No. 13-C-1214 (E.D. Wis. 3/18/14)). Under Sec. 4980H, an applicable large employer
Details of proposed anti-inversion rules are revealed
The IRS followed up on the Treasury Department’s Monday announcement that it is cracking down on corporate tax inversions by providing more detail on how the crackdown will work (Notice 2014-52). The new rules, which will be issued as regulations, generally apply to inversion transactions occurring on or after Sept.
Success-based fees and milestone payments
When taxpayers incur costs that relate to an acquisition or restructuring, they generally must capitalize any costs incurred to facilitate (i.e., investigate or otherwise pursue) the transaction (Regs. Sec. 1.263(a)-5). When fees paid to service providers are contingent upon the successful closing of a transaction, taxpayers can use a facts-and-circumstances
Final rules clarify retailers’ treatment of vendor discounts in inventory valuation
Final regulations issued Thursday restate and clarify retailers’ computation of ending inventory value, including the application of common vendor discounts (T.D. 9688). The amendments to Regs. Sec. 1.471-8 are intended to render that section’s provisions in plainer language and provide rules for how sales-based vendor allowances and vendor markdown allowances
Regs. govern dispositions of depreciable property
The IRS issued final regulations providing rules for how to determine gain or loss when property subject to depreciation is disposed of, how to determine the asset disposed of, and how to account for partial dispositions of depreciated property (T.D. 9689). The regulations apply to property that is subject to
Treating partners as employees: Risks to consider
Partnerships often grant equity interests to valued employees but often mistakenly continue to treat them as employees for employment tax and other purposes. This article examines the risks a partnership and the partner run in continuing this treatment and suggests a few solutions.
New treatment of disguised sales and partnership liabilities
The IRS issued proposed regulations in January dealing with disguised sales of property to or by a partnership under Sec. 707 and the treatment of partnership liabilities under Sec. 752 (REG-119305-11). According to the IRS, the proposed regulations are designed to address “deficiencies and technical ambiguities” in the current regulations.
Final rules issued on bona fide indebtedness and terminating partnership’s startup expenses
On Tuesday, the IRS issued T.D. 9682, which finalized proposed regulations relating to basis of indebtedness of S corporations to their shareholders that provide that S corporation shareholders increase their basis of indebtedness of the S corporation to the shareholder only if the indebtedness is bona fide, which is determined
New rules on covered asset acquisitions will shut down transactions to avoid Sec. 901(m)
In Notice 2014-44, the IRS announced that it would issue regulations to prevent taxpayers from misapplying the statutory disposition rule in cases where the gain or loss from the disposition of the relevant foreign asset (RFA) is recognized for U.S. income tax purposes but not for foreign income tax purposes.
Definitions of R&E expenditures are amended under final rules
The IRS issued final regulations on which amounts paid or incurred in connection with the development of tangible property, including pilot models, qualify for the Sec. 174 deduction (or amortization) for research and experimental expenditures (T.D. 9680). The regulations finalize proposed rules issued last September (REG-124148-05), with a few changes
Effective date of fiduciary fee unbundling rules delayed until 2015
In response to a comment that the current effective date of the new rules on fiduciary fees does not give fiduciaries enough time to implement them, the IRS amended T.D. 9664 to delay the date. As a result, the new rules governing which costs of trusts and estates are subject
Partnership interest expense allocation rules are finalized
The IRS has finalized, without substantive changes, proposed regulations that were issued in conjunction with temporary regulations in January 2012. The final regulations make permanent four changes to the rules for allocating and apportioning interest expense for partners in partnerships (T.D. 9676). The first change is to the method for apportioning
The Sec. 4980H assessable payment for large employers
Know your business’s responsibilities under the Affordable Care Act.
Employment tax responsibilities of designated payer agents
New rules clarify tax responsibilities when an employer designates an agent to pay its employees. The IRS issued final regulations on the liability for employment taxes when an employer designates an agent under a “service agreement” to pay its employees and to satisfy its employment tax obligations instead of following
Country-by-country reporting by multinationals
The Organisation for Economic Co-operation and Development (OECD) has recently been advocating for increased tax transparency and for international cooperation to prevent tax avoidance. One element of this international cooperation that the OECD would like to see implemented is country-by-country income and tax reporting by multinational corporations. Country-by-country reporting would
Rollover of gains on certain property dispositions
A little-known provision of the Code is Sec. 1044, which allows certain taxpayers to defer recognition of gain on the sale of publicly traded securities that is reinvested into specialized small business investment companies (SSBICs). When taxpayers later dispose of interests in SSBICs, important tax implications can arise from the
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