Tax Law

    • 8 Dec 2016

    Covered Asset Acquisitions Regulations Examined

    Proposed and temporary regulations under IRC Section 901(m) affect covered asset acquisitions, which are transactions that are generally treated as asset acquisitions for U.S. income tax purposes and that either are treated as stock acquisitions or are disregarded for foreign income tax purposes. [TD 9800, 81 FR 88103 (Dec. 7, 2016) (the temporary regulations); 81 FR 88562 (Dec. 7, 2016) (the proposed regulations)]. Specifically...
    • 20 Oct 2016

    New Regs on Earnings Strippings Transactions

    On October 13, 2016, the Treasury and IRS issued regulations [T.D. 9790 (Oct. 13, 2016)] finalizing and revising proposed regulations issued earlier in the year that targeted post-inversion earnings strippings transactions, which are certain related-party debt transactions that inverting companies engage in post-inversion to lower their tax liability. The issuance of the proposed regulations in April was received with...
    • 8 Jun 2015

    LexisNexis Introduces Lexis Advance® Tax

    Editor's Note: The complete text of this Press Release is available at the end of this post. ... NEW YORK, June 4, 2015 – LexisNexis ® Legal & Professional today announced the release of Lexis Advance ® Tax , a specialized research portal providing comprehensive, authoritative legal information, current news, and analysis to tax and estates attorneys, accountants, government tax professionals...
    • 21 Jun 2013

    Estate Tax Repeal Movement Intensifying

    Questions surrounding the future of the estate tax seem to be a constant in recent years. On June 19 th , Senator John Thune of South Dakota and Representative Kevin Brady of Texas resurrected the issues surrounding the estate tax by expressing their hope that a repeal of the estate tax would be included in a broader tax reform effort. Thune and Brady then went on to introduce the Death Tax Repeal Act of 2013 (S. 1183...
    • 18 Jun 2013

    Bay State Firm's Nexus Gambit Ruled a Sham

    The transfer of Massachusetts employees from an in-state company to its out-of-state parent was disregarded for tax purposes by the Massachusetts Appellate Tax Board ("the Board"). The transfer, which established Massachusetts nexus for the parent and caused the parent to be included in the 'nexus combined' corporate excise tax return, allowed the parent's losses to offset the income of other members...
    • 15 May 2013

    Offset Elixir: Elusive Antidote for Medical Device Excise Tax Pain

    The Medical Devices Excise Tax was imposed pursuant to Section 1405(a) of the Health Care and Education Reconciliation Act of 2010 ( P.L. 111-152 , the "Act"). Almost immediately after the Act was signed into law, calls for repeal began. Proposed repeal legislation was introduced in both houses shortly after the tax went into effect in January 2013. See 2013 H.R. 523 and 2013 S. 232 . While the Senate has voted...
    • 26 Mar 2013

    California Taxpayers Whipsawed!

    QSBS Exclusion, Deferral Statutes Unconstitutional In August 2012, California's Second District Court of Appeal determined that the "qualified small business stock" (QSBS) exclusion and deferral statutes were unconstitutional. See Cal. Rev. & Tax. Code Sections 18038.5 and 18152.5 ; Cutler v. Franchise Tax Board, 208 Cal. App. 4th 1247 (2012) . Because the statutes required companies to maintain a...
    • 4 Mar 2013

    Rich to Pay More in 2013 – What About 2014, 2015…?

    A king ought to shear, not skin, his sheep - Robert Herrick ... In the context of federal tax policy and, in particular, how much the "wealthy" should be paying, what exactly does "fair" mean? With so much debate about tax policy "fairness" swirling about the country during the past four years, I have not heard any conclusive, definite answer to this threshold question. If the "rich"...
    • 19 Feb 2013

    STARS Transaction Lacks Economic Substance

    Although the economic substance doctrine has been recognized by the courts for a long time and was codified as IRC Section 7701(o) in 2010, it has not stopped taxpayers from trying to avoid or reduce tax liability through creative structuring of various types of transactions. However, the IRS has taken full advantage of the economic substance doctrine to subject taxpayers to the economic reality of the transaction. A...
    • 7 Feb 2013

    The Politics of Global Warming: Using Taxation to Impact Climate Change

    The U.S. Fish and Wildlife Service recently proposed the addition of the wolverine to the federal list of endangered species. The proposal asserted that global warming was largely to blame for the dramatic reduction in the wolverine's Rocky Mountain habitat and that, without listed protection, the species would face extinction. See Felicity Barringer, "U.S. Proposes to Protect the Wolverines," The New York...
    • 5 Feb 2013

    Maryland Court Says Unitary Relationship Creates Nexus

    The Maryland Court of Special Appeals held that a company that lacks physical presence in Maryland has sufficient nexus to justify corporate income taxes based on its unitary relationship with an affiliate operating in the state. [ Comptroller of the Treasury v. Gore Enter. Holdings, Inc., 2013 Md. App. LEXIS 7 (Md. Ct. Spec. App. Jan. 24, 2013) .] Background W.L. Gore &Associates, Inc. (Parent), a Delaware corporation...
    • 22 Jan 2013

    January 31 IRA Deadline Nears for 2012 Qualified Charitable Contributions

    The Pension Protection Act of 2006 added IRC Section 408(d)(8) , providing that owners of an IRA who were 70 ½ or older may donate an otherwise taxable distribution from an IRA to an eligible charitable organization. Each year, the IRA owner could exclude from gross income up to $100,000 of these qualified charitable donations. This provision was set to expire at the end of 2011. However, the American Taxpayer...
    • 7 Jan 2013

    States Target Inter-Company Cash Management Structure

    A common aspect of consolidated groups of companies is a centralized cash management function. While such a structure is a common item in corporate America, states are increasingly challenging any perceived tax benefits of such structures. Two states, Indiana and North Carolina, have taken recent actions to utilized discretionary authority with respect to alternative apportionment to force taxpayers with such structures...
    • 28 Dec 2012

    Guidance Needed on 1-Year Holdout Rule Elective Deferrals

    When an employee is rehired by a company, the granting or vesting of benefits under certain retirement plans may be delayed until the employee has been re-employed for a period of at least one year. The applicability of this "Holdout Rule" is becoming more common as the economy makes a recovery and former employees are targeted for rehiring. Under the Holdout Rule, if an employee's term of service is disrupted...
    • 17 Dec 2012

    Deadline to Amend Plans for Funding-Based Benefit Limitations Extended

    The IRS has extended the deadline originally provided in Notice 2011-96 to amend a defined benefit plan to satisfy the requirements of IRC Section 436 and has provided relief from the requirements of IRC Section 411(d)(6) . In general, Notice 2012-70 extends the deadline to adopt an interim amendment for IRC Section 436 to the latest of: the last day of the first plan year that begins on or after January 1, 2013;...
    • 20 Nov 2012

    Utilizing the New Market Tax Credit

    The Internal Revenue Code contains various tax incentives for taxpayers willing to invest in low-income communities. IRC Section 45D provides once such incentive for taxpayers who make qualified equity investments in a selected community development entity ("CDE"). The new market credit entitles the taxpayer who holds a qualified equity investment (an investment in a qualified CDE) to a 5-percent credit for...
    • 16 Nov 2012

    IRC § 409A and Changes in Control: Must Option Cash-Outs Be “All-or-Nothing”?

    IRC Section 409A was enacted post-Enron to stem the abuse of corporate executives who accelerated payments under their deferred compensation plans before the company went bankrupt. IRC Section 409A sets strict guidelines for private companies issuing stock options and other forms of non-qualified deferred compensation. Noncompliance results in immediate taxation of benefits and steep penalties. IRC Section 409A also addresses...
    • 15 Nov 2012

    Tennessee DOR’s Nettlesome Guidance on Related Party Intangible Expenses

    It has been some time since a state tax department has promulgated any guidance on the issue of related party interest and intangible expenses. With fiscal cliffs and other budget problems, states have turned their focus to other means of cracking down on perceived corporate tax abuse. The Tennessee Department of Revenue ("Department") has recently promulgated new guidance addressing the treatment of related...
    • 22 Oct 2012

    Family Limited Partnership Still Useful in Estate Planning

    Over the years family limited partnerships (FLPs) have experienced their fair share of scrutiny by the IRS and the courts. However, as evidenced by the Fifth Circuit's opinion in Keller v. United States , 2012 US App LEXIS 20119 , FLPs can be a very useful tool for protecting assets and reducing the amount of federal estate tax. In Keller , the Court upheld a $115 million estate tax refund upon determining that bonds...
    • 3 Oct 2012

    D.C. Struggles to Implement Combined Reporting Continue

    On September 19, 2012, the District of Columbia Council approved an emergency bill amending the District's combined reporting provisions applicable for the 2011 tax year. Should the bill be approved by the Mayor, the emergency legislation will be in effect for no more than 90 days, after which temporary legislation is expected to become effective until the Council enacts permanent legislation to address the issues...
    • 18 Sep 2012

    TE/GE Fast-track Settlement Program Becomes Permanent

    In December 2008, the IRS announced a pilot program for entities with issues under examination by the Tax Exempt and Governmental Entities Division (TE/GE), providing such entities an opportunity to use Fast Track Settlement (FTS) to expedite case resolution. Announcement 2008-105 . FTS allows entities to work together with TE/GE and the Office of Appeals to resolve outstanding issues while the case is still in TE/GE...
    • 6 Sep 2012

    Illinois Inconsistently Applies Amnesty Double Interest Penalty

    The Illinois Appellate Court recently found that a taxpayer who failed to pay a tax liability under the state's 2003 amnesty was subject to a 200% interest penalty, even though the taxpayer did not know it owed the tax until after a federal audit. [ Marriott Int'l, Inc. v. Hamer, 2012 Ill. App. LEXIS 684 (Ill. App. Ct. 1st Dist. 2012) .] A different division of the same appellate court reached the opposite conclusion...
    • 29 Aug 2012

    Obamacare Survives Under Power of Taxation

    In the Supreme Court's decision in National Federation of Independent Business v. Sebelius, 132 S. Ct. 2566 (June 28, 2012) , the Court determined the constitutionality of the most controversial provision of the Patient Protection and Affordable Health Care Act of 2010 ( P.L. 111-148 , also known as "Obamacare"). The individual mandate that requires all people have health insurance or pay a penalty was held...
    • 20 Aug 2012

    Obama vs. Romney: What It Means for the Estate Tax - Will It be Eliminated or Renewed?

    The December 31, 2012 sunset date for the estate tax, as provided by the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, is once again quickly approaching, and in typical fashion there is a divide over what the fate of the estate tax should be. With the Obama and Romney campaigns in full swing, both have established their position on the estate tax. The Romney tax plan includes the...
    • 8 Aug 2012

    JobsOhio, Taxes and Budget Surpluses: One Man’s Meat, Another Man’s Poison

    In an astounding 2-year turnaround, Ohio Gov. John Kasich's administration has turned a gaping $8 billion Ohio biennial budget deficit into an estimated $408 million surplus for fiscal 2013. The surplus estimated excludes an anticipated $500 million windfall to the state from JobsOhio , the controversial nonprofit corporation that the Kasich administration set up as a privatized agency for economic development in...