Tax Law

Recent Posts

FATCA and Foreign Funds
Posted on 3 Mar 2011 by Ivan Mitev

...[A]n article... by Lee Sheppard titled "Danilack Warns Multinationals on FATCA and GRAs" ...reports on deputy commissioner (international) Michael Danilack's views on FATCA and raises some questions... "What if private equity funds... Read More

The Greenbook for Obama's 2012 Budget Was Just Released
Posted on 15 Feb 2011 by Ivan Mitev

The Administration just came out with its 2012 budget and as expected, the budget contains, again, a proposal to tax carried interest. The main difference from last year's proposal is the change from "service partnership interest" (SPI)... Read More

Chief Counsel: IRS Can't Levy on SMLLC Property to Satisfy Owner's Liability
Posted on 28 Apr 2011 by Ivan Mitev

CCA_2011032112062926 Chief Counsel was asked whether it is appropriate to levy on the assets of a single member LLC to satisfy the owner's tax liability and the answer was No. However, CC also suggested that a reverse piercing veil approach may be... Read More

Penalties and Retainer Letters After the Enactment of Economic Substance
Posted on 14 Mar 2011 by Ivan Mitev

As mentioned a few times on this blog, Congress codified the economic substance doctrine last year as part of the Health Care and Education Reconciliation Act of 2010. One of the aspects of the new law is the introduction of a strict liability penalty... Read More

Lending and the 864(b)(2) Safe Harbor
Posted on 9 Jun 2011 by Ivan Mitev

... The question that is on many fund tax advisors' minds is whether passive investors in funds should fall within the trading safe harbor if the fund engages in certain types of loan acquisitions. The NYSBA commented last year that the issue should... Read More

New Details on the Upcoming Voluntary Disclosure Program
Posted on 28 Jan 2011 by Ivan Mitev

I posted not long ago on this blog that a new voluntary disclosure program is in the cards. It appears that the new program will be officially anounced very soon. Few days ago Kristen A. Parillo had a piece on TNT reporting some of the details of this... Read More

FinCen Finalizes the Proposed FBAR Regs
Posted on 24 Feb 2011 by Ivan Mitev

So the 31 CFR §103.24 FBAR regulations became final on February 24,2011. The regulations are effective as of March 28, 2011. I personally had a modicum of hope that the final version would exempt interest in private equity, venture capital and hedge... Read More

Notice 2011-34: The Second Round of FATCA Guidance Is Released
Posted on 19 Apr 2011 by Ivan Mitev

... [Notice 2011-34 FATCA] guidance comes in the form of another voluminous notice... which, in addition... Notice 2010-60, comes to a... possible 100-150 page proposed regulation, counting the preamble. It seems paradoxical... when everybody is talking... Read More

Alternative Method for No-Cap Earnout Basis Recovery
Posted on 27 May 2011 by Ivan Mitev

In PLR 201111002 the Service Approves an Alternative Method for Basis Recovery in a No-Cap Earnout Earnouts are very common in private equity and venture capital deals. The fund could be exposed to the earnout as a seller or a buyer of a portfolio... Read More

Pete Stark Reintroduces Last Year's Currency Tax Bill
Posted on 10 Mar 2011 by Ivan Mitev

For those who do not remember, last year Pete Stark, a D- Cal Representative introduced H.R. 5783, the Investing in Our Future Act of 2010. That bill basically provided that currency transactions will be subject to a 0.005 percent tax on the value of... Read More

Retroactive QEF Election Granted in PLR 201120009
Posted on 26 May 2011 by Ivan Mitev

... Investment fund participants ought to be familiar with the passive foreign investment company (PFIC) and [qualified electing fund] QEF rules. These are anti-deferral rules that could cause the investor to have reporting obligations and more importantly... Read More

FATCA, Stop Tax Haven Abuse Act and Monetization Strategies
Posted on 17 Aug 2011 by Ivan Mitev

Had [the Stop Tax Haven Abuse Act] been enacted, [it] would have impacted the investment fund industry in many ways, including the conversion of many foreign "blocker" entities into US corporations. The bill did not get traction but now it is... Read More

  • Blog Post: New Details on the Upcoming Voluntary Disclosure Program

    I posted not long ago on this blog that a new voluntary disclosure program is in the cards. It appears that the new program will be officially anounced very soon. Few days ago Kristen A. Parillo had a piece on TNT reporting some of the details of this new program. IRS Official Previews Process for New...
  • Blog Post: The Greenbook for Obama's 2012 Budget Was Just Released

    The Administration just came out with its 2012 budget and as expected, the budget contains, again, a proposal to tax carried interest. The main difference from last year's proposal is the change from "service partnership interest" (SPI) to "investment services partnership interest"...
  • Blog Post: FinCen Finalizes the Proposed FBAR Regs

    So the 31 CFR §103.24 FBAR regulations became final on February 24,2011. The regulations are effective as of March 28, 2011. I personally had a modicum of hope that the final version would exempt interest in private equity, venture capital and hedge funds as reportable accounts, but that did not...
  • Blog Post: FATCA and Foreign Funds

    ...[A]n article... by Lee Sheppard titled "Danilack Warns Multinationals on FATCA and GRAs" ...reports on deputy commissioner (international) Michael Danilack's views on FATCA and raises some questions... "What if private equity funds are making U.S. investments through a foreign holding...
  • Blog Post: Pete Stark Reintroduces Last Year's Currency Tax Bill

    For those who do not remember, last year Pete Stark, a D- Cal Representative introduced H.R. 5783, the Investing in Our Future Act of 2010. That bill basically provided that currency transactions will be subject to a 0.005 percent tax on the value of the currency acquired in the transaction. Last year...
  • Blog Post: Penalties and Retainer Letters After the Enactment of Economic Substance

    As mentioned a few times on this blog, Congress codified the economic substance doctrine last year as part of the Health Care and Education Reconciliation Act of 2010. One of the aspects of the new law is the introduction of a strict liability penalty for engaging in transactions that lack economic substance...
  • Blog Post: Notice 2011-34: The Second Round of FATCA Guidance Is Released

    ... [Notice 2011-34 FATCA] guidance comes in the form of another voluminous notice... which, in addition... Notice 2010-60, comes to a... possible 100-150 page proposed regulation, counting the preamble. It seems paradoxical... when everybody is talking about simplifying the Tax Code. I'd venture...
  • Blog Post: Chief Counsel: IRS Can't Levy on SMLLC Property to Satisfy Owner's Liability

    CCA_2011032112062926 Chief Counsel was asked whether it is appropriate to levy on the assets of a single member LLC to satisfy the owner's tax liability and the answer was No. However, CC also suggested that a reverse piercing veil approach may be appropriate. Nonetheless, it also acknowledged that...
  • Blog Post: Retroactive QEF Election Granted in PLR 201120009

    ... Investment fund participants ought to be familiar with the passive foreign investment company (PFIC) and [qualified electing fund] QEF rules. These are anti-deferral rules that could cause the investor to have reporting obligations and more importantly, convert capital gains to ordinary income. Like...
  • Blog Post: Alternative Method for No-Cap Earnout Basis Recovery

    In PLR 201111002 the Service Approves an Alternative Method for Basis Recovery in a No-Cap Earnout Earnouts are very common in private equity and venture capital deals. The fund could be exposed to the earnout as a seller or a buyer of a portfolio company. An earnout is basically a contingent installment...
  • Blog Post: Lending and the 864(b)(2) Safe Harbor

    ... The question that is on many fund tax advisors' minds is whether passive investors in funds should fall within the trading safe harbor if the fund engages in certain types of loan acquisitions. The NYSBA commented last year that the issue should be included on the 2010-11 guidance list. That...
  • Blog Post: FATCA, Stop Tax Haven Abuse Act and Monetization Strategies

    Had [the Stop Tax Haven Abuse Act] been enacted, [it] would have impacted the investment fund industry in many ways, including the conversion of many foreign "blocker" entities into US corporations. The bill did not get traction but now it is being reintroduced both in the Senate (S.1346 introduced...