New Rev. Proc. Provides that Citrus Replanting Costs Not Included in Automatic Accounting Method Changes
Posted on Jun 22, 2018 in News, Tax Accounting
Released Tuesday, Rev. Proc. 2018-35 provides that the new automatic change procedures under Rev. Proc. 2018-31 do not apply section 263A to replanting costs for damaged or lost citrus plants. Section 263A generally requires taxpayers to include the costs of certain property produced or acquired for resale to be included in inventory costs. However, under section 263A(d)(2)(A) as...
House Budget Would Extend Individual TJCA Provisions
Posted on Jun 20, 2018 in Individual Taxation, News
On June 19, 2018, the House Budget Committee released a 10-year budget plan that, if passed, would provide a vehicle to extend the individual tax provisions enacted under the TJCA past their current expiration date in 2025 through the budget reconciliation process. To help reduce the cost of extending the cuts, the budget plan requires committees to submit legislation to reduce the...
Legislation for Phase 2 of Tax Reform Expected in August
Posted on Jun 18, 2018 in News
House Ways and Means Committee Chair Kevin Brady indicated that Republicans hope to have a proposal for healthcare and additional tax changes by August. While the contents of the bill remain uncertain, potential topics include: permanent individual income tax provisions, retirement savings, the treatment of capital gains, and employer incentives for helping to pay back student loan...
Guidance on Section 199A May Halt Benefitting Firms
The Treasury Department may issue guidance on section 199A in response to workarounds taken by law and accounting firms. The new section 199A provides a 20% deduction for qualifying pass-through businesses. Since its enactment, offices have been broken down into separate businesses to take advantage of the deduction; future guidance may halt this technique. According to an official at...Congressman States that the TCJA will not be Amended, Despite EU Criticism
Posted on Jun 7, 2018 in International Tax, News
Rep. Peter Roskam, a Republican member of the House Ways and Means Committee, stated at a conference that, despite criticism from EU officials, Congress does not intend to amend the Tax Cuts and Jobs Act (TJCA). Some EU officials have been particularly critical of the foreign-derived intangible income provision, arguing that the provision essentially acts as an export subsidy which...
The IRS Releases Additional Guidance on Penalties Related to the Transition Tax
Posted on Jun 5, 2018 in International Tax, News
The IRS announced that it will waive the estimated tax penalty for taxpayers subject to the transition tax under section 965 in certain instances, such as (1) for any taxpayer that improperly applied a 2017 overpayment to a 2018 estimated tax liability, and (2) for any individual that missed the April 18, 2018 deadline for making the first payment. Read more: IRS offers penalty, filing...
Potential Phase Two of Tax Legislation Focuses on Making Individual Tax Changes Permanent
Posted on Jun 5, 2018 in Individual Taxation, News
House Republicans intend to roll out a second package of tax cuts this summer. The focus of the new bill is to make the individual tax cuts permanent, but it may also include other changes, such as cutting capital gains taxes and including incentives to boost business innovation. House Ways and Means Committee Chairman Kevin Brady anticipates that the new bill would be approved in the...
IRS to Crackdown on SALT Deduction Cap Workarounds
Posted on May 24, 2018 in News, State and Local Tax
The IRS intends to issue regulations pertaining to states’ attempts to subvert the state and local tax deduction cap. The Tax Cuts and Jobs Act imposed a $10,000 ($5,000 for married individuals filing separately) limit on state and local tax deductions for federal income tax purposes. Certain states, including New York, New Jersey, and Connecticut, have enacted legislation to allow...
Committee Hearing Discusses Tax Reform Impact and Next Steps
Posted on May 21, 2018 in International Tax, News
The House Ways and Means Committee held a hearing last Wednesday, May 16th, where Republicans and Democrats continued to be divided in their evaluations of the recent tax reform and its effects on jobs, the economy, and investment. In opening statements, Richard Neal criticized the new law for giving “83 percent of the tax savings to the top one percent.” Testimony during the hearing...
The Upcoming FAA Authorization May Not Contain Any Technical Corrections to the Tax Legislation
Posted on May 16, 2018 in News, Tax Accounting
House Ways and Means Chairman Kevin Brady has indicated that the upcoming Federal Aviation Administration (“FAA”) reauthorization bill is unlikely to contain additional technical corrections to the 2017 tax bill, despite containing a tax title. Congress had previously passed, in the 2018 Consolidated Appropriations Act, a technical correction to fix a provision that encouraged farmers...
IRS Provides Timeline for Tax Reform Guidance
Posted on May 15, 2018 in International Tax, News
During the ABA Section of Taxation meeting in Washington, D.C. on May 12, David Kautter, the acting IRS commissioner, provided a rough timeline as to when IRS intends to release guidance related to the 2017 tax act. Kautter stated that a notice regarding section 965 (the so-called transition tax) may be released in the next two weeks and that proposed regulations are slated for release...
Rev. Proc. Offers Automatic Accounting Change for 606 Book-Tax Accounting Conformity
Posted on May 14, 2018 in News, Tax Accounting
An automatic method change is now available for taxpayers wishing to change their accounting method to comply with the new financial accounting standards issued by the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) (“Topic 606”). Under the new standards of Topic 606, taxpayers recognize revenue from contracts with customers based on...
No Rules or Answers: Notices to Just Provide Notice
Posted on May 11, 2018 in News, Tax Accounting
Rather than provide “subregulatory guidance” or answer specific questions, future notices will simply notify taxpayers of regulations to come. According to Catherine Hughes of the Treasury’s Office of Tax Policy, the Treasury and IRS will not create new rules, but give a “heads up” of what proposed regulations are in the works. This has been seen in recent notices, including Notice...
IRS Issues Guidance Related to Determining Built-in Gain or Loss under Section 382
Posted on May 9, 2018 in News, Tax Accounting
Recently released Notice 2018-30 provides that the two safe harbor approaches in Notice 2003-65–related to recognizing built-in gain or loss–will be determined without regard to the bonus depreciation rule under section 168(k). Section 382 imposes limits of the amount of built-in losses that can offset future taxable income following ownership change. The notice states that...
IRS Considering the Definition of a “Trade or Business” under Section 163(j)
Posted on May 4, 2018 in News, Tax Accounting
The IRS is in the process of defining a “trade or business” for purpose of determining what counts as business interest for the purposes of section 163(j). The text of the statute and Notice 2018-28 indicate that all income earned by a corporation is business interest, but questions still remain on whether a corporation that receives only passive dividend income is a business and...