LexisNexis® Legal Newsroom
Proposed Regs Issued on Bona Fide Residency in U.S. Territories

On August 26, the Service and Treasury Department issued proposed amendments to the regulations under IRC Section 937 for determining whether an individual is a bona fide resident of a U.S. territory. [Preamble, REG-109813-11]. In general, IRC Section 937 defines a "bona fide resident" as...

Foreign Earned Income Exclusion Timely Election Rules Upheld

The Tax Court recently upheld the validity of Treasury Regulations Section 1.911-7(a)(2) in a case where the taxpayer sought application of the foreign earned income exclusion (FEIE) under IRC Section 911 , but was denied the exclusion because she had failed to make a timely election pursuant to Section...

New Guidance: U.S. Property Held by CFCs in Transactions Tied to Partnerships

The IRS and Treasury have issued new guidance on the treatment of United States property held by a controlled foreign corporation (CFC) in connection with certain transactions that involve partnerships. The regulations are issued under IRC Section 956 , the Code section under which the amount a U.S....

Guidance on Taxation of Gifts or Bequests from U.S. Expatriates

The Service and Treasury have issued proposed regulations affecting taxpayers who receive gifts or bequests from U.S. expatriates. [ 80 FR 54447 ]. The regulations are issued under IRC Section 2801 , which imposes a tax on covered gifts or bequests received by U.S. citizens or U.S. residents from covered...

FATCA Taxpayer Account Information Exchange Begins

The IRS has announced that the exchange of financial account information under FATCA has begun, meeting the September 30 date set by the Service. (See the FATCA timeline on the IRS website for important dates at http://www.irs.gov/Businesses/Corporations/Summary-of-FATCA-Timelines ). As noted in the...

Stephen Looney on Fargo V. Commissioner

by Stephen Looney* In Fargo v Commissioner [ T.C. Memo 2015-96 ], the Tax Court held that a couple had ordinary income from a property sale by a partnership in which they were partners because the property was sold in the ordinary course of business. The taxpayer, husband and wife, were partners in...

NYU INSTITUTE ON FEDERAL TAXATION – NEW YORK CITY

The NYU School of Professional Studies Institute on Federal Taxation is designed for the practitioner who must frequently anticipate and handle federal tax matters. It provides high-level updates, practical advice you can implement, and in-depth analysis of the latest trends and developments from leading...

Property Transfers to Partnerships; Controlled Transactions Tied to Partnerships

Notice 2015-54 , 2015 IRB LEXIS 335 (Aug. 6, 2015), announces the future issuance of regulations under IRC Section 721(c) to ensure that, when certain property is transferred by a U.S. person to a partnership with foreign partners that are related to the transferor, the transferor will take into account...

Proving Estate and Gift Tax Value: Evolving Lessons From Recent Cases

[1] Introduction The term, "fair market value," proves one of the most litigated in the Federal estate and gift tax code. Value lies in the eyes of the appraiser, often resulting in wide disparities between the Service's and taxpayer's appraised values. [ See, e.g., Est. of Giovacchini...

Taxation of Charitable Remainder Trust Beneficiaries on Sale of Trust Interests

A charitable remainder annuity trust is required to pay out a fixed dollar amount to the income beneficiary or beneficiaries. A charitable remainder unitrust must in general pay out to the income beneficiary or beneficiaries a fixed percentage of the annually redetermined net fair market value of the...

ALERT! More Corporate Inversion Regs On The Way

The IRS and Treasury have issued Notice 2015-79, 2015 IRB LEXIS 583 (Nov. 19, 2015) , announcing the government’s intention to issue additional regulations targeting corporate inversion transactions. The initial announcement of the government’s plan to issue regulations addressing inversion...

Suellen Wolfe on King v. Burwell

By Suellen M. Wolfe * The Patient Protection and Affordable Care Act (hereinafter referred to as ACA) [PL 111-148, 124 Stat 119 (Mar 23, 2010)] provides for health care reform law in the United States. The ACA consists of the Affordable Health Care for America Act, the Patient Protection Act, health...

Avoiding Net Investment Income Tax on Sale of S-Corporation Stock

by Matthew Cavitch, J.D. * An S corporation can save certain shareholders—shareholders who are treated as non-passive under Section 469—the 3.8% net investment income tax. The 3.8% net investment income tax is imposed to the extent the taxpayer's modified adjusted gross income exceeds...

Consistent Basis Reporting Requirements

Executors of decedents' estates required to file federal estate tax return must also file a form reporting estate tax value of assets distributed to beneficiaries. Certain beneficiaries must use a consistent value for purposes of determining income tax basis and consequently capital gains and depreciation...

Global Positioning of IP

by William H. Byrnes IV and Marvin Petry * @ A multinational enterprise is ordinarily organized as a parent company having subsidiaries, branches, or joint ventures in foreign locations where the enterprise may have employees, agents, business assets, or customers. The parent and its subsidiaries...

Property Acquired from a Decedent and the Consistent Basis Requirement

Under IRC Section 1014, the basis of property acquired from a decedent is the fair market value of the property on the date of the decedent's death. [ IRC § 1014(a)(1) .] The provisions of IRC Section 1014, along with the Treasury Regulations under IRC Section 1401, contain the rules for determining...

The Challenge of Taxing the Sharing Economy

by Jessica L. Kerner, J.D., LL.M. * In 2007, a hotel room shortage in San Francisco prompted two roommates to create a website to rent out air mattresses in their apartment. Less than eight years later, the company they founded, Airbnb, has been valued at more than $25 billion. ["Value of Airbnb...

April ’16 Inversion Regs Impose Anti-Earnings Strippings Rules

On April 8, 2016, the IRS and Treasury took additional action against corporate inversions and issued temporary, proposed, and final regulations targeting inversion transactions. Among the proposed regulations were much anticipated rules that address earnings strippings transactions. This article briefly...

Temporary Regs Take on Previously Unaddressed Inversion Issues

The IRS and Treasury recently issued the latest set of rules aimed at corporate inversions. The temporary, proposed, and final regulations target: (1) transactions structured to avoid the objectives of IRC Section 7874 ; and (2) certain post-inversion tax avoidance transactions. [ T.D. 9761 (final...

Officials Open to Clarifying Political Subdivision Regs

Officials on June 6 appeared willing to clarify provisions in controversial proposed regulations that would redefine the meaning of political subdivision in issuing tax-exempt bonds. At a hearing at IRS headquarters in Washington, Spence Hanemann, branch 5 attorney, IRS Office of Associate Chief Counsel...

Subchapter K: In or Out?

by Dmitriy Kustov CPA EA MS Tax * Sub K's Cubist Period The word, "partnership," has so many common place meanings and could mean so much these days that we should not blame those taxpayers who do not understand all the technicalities of partnership for tax purposes. Curiously, the...

Application of the Accuracy-Related Penalty to an Inconsistent Estate Basis

Last year, IRC Section 1014 was amended by the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 to provide that the basis of inherited property must be consistent with the estate tax return. [Pub L No 114-41, 114th Cong, 1st Sess, § 2004(a) (July 31, 2015); IRC §...

New Law Allowing IRS to Seize Passport

by Mark A. Muntean * Introduction A new law allows the Internal Revenue Service ("IRS" or the "Service") to revoke or deny passports for certain taxpayers who owe unpaid federal taxes. This change to the tax law was included in the Fixing America's Surface Transportation...

Parties Agree on Law's Irrelevance in Puerto Rican Wal-Mart Case

In a rare instance of agreement in a bitter court battle between Wal-Mart and the Puerto Rican government, the two sides said that legislation passed by Congress in June to deal with the island's unpayable public sector debt has no bearing on the retail giant's legal challenge to a stiff increase...

Tax Fairness Is Top Priority in Democratic Platform

The 2016 Democratic Party platform contains many of the party's conventional tax policy positions, such as calling for solutions to address income inequality, but some observers suggested that the emphasis on tax fairness brings with it big spending and tax increases. The Democrats' platform...