The U.S. Treasury Department and IRS this afternoon released for publication in the Federal Register final regulations (T.D. 9872) concerning the income inclusion rules under section 50(d)(5) that apply to a lessee of investment credit property when a lessor of that property elects to treat the lessee as having acquired the property.
Today’s final regulations [PDF 352 KB] finalize regulations that were proposed in July 2016 (and withdraw corresponding temporary regulations) and, according to the preamble, adopt the “proposed regulations without modification.”
The final regulations are effective July 17, 2019.
These regulations provide the income inclusion rules under section 50(d)(5) as applicable to a lessee of investment credit property when a lessor elects to treat the lessee as having acquired the property.
Generally, if an owner of investment credit property claims the investment tax credit, the owner must reduce the basis in such property by an amount of the investment tax.
The regulations released in 2016 provided: (1) rules to coordinate the section 50(a) recapture rules with the section 50(d)(5) income inclusion rules; and (2) rules regarding income inclusion upon a lease termination, lease disposition by a lessee, or disposition of a partner’s or S corporation shareholder’s entire interest in a lessee partnership or S corporation outside of the recapture period. Read TaxNewsFlash
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.