- The U.S. Tax Court issued its opinion in a case upholding the IRS’s findings of deficiencies stemming from transfer pricing adjustments and by which the IRS reallocated substantial amounts of income (approximately $9 billion) to the taxpayer from its foreign manufacturing affiliates.
- Final regulations provide guidance regarding tax-advantaged “achieving a better life experience” (ABLE) accounts.
- OMB’s Office of Information and Regulatory Affairs (OIRA):
- Completed its review of final regulations concerning like-kind exchanges
- Received for review final regulations regarding the timing of inclusion in gross income under section 451(b)
- An updated a set of “frequently asked questions” (FAQs) about the employee retention credit (ERC) to address the interaction of the ERC with other credit and relief provisions, in particular with regard to the paycheck protection program (PPP) in acquisitions.
- A safe harbor allowing a taxpayer that received PPP loans to claim a deduction in the taxpayer’s tax year beginning or ending in 2020 for certain otherwise deductible eligible expenses if certain conditions are met (Rev. Proc. 2020-51).
- A taxpayer computing taxable income on the basis of a calendar tax year may not deduct eligible expenses in its 2020 tax year if, at the end of the 2020 tax year, the taxpayer has a reasonable expectation of reimbursement in the form of PPP loan forgiveness on the basis of the eligible expenses it paid or accrued during the subject period (Rul. 2020-27).
- A contribution to a single-employer defined benefit pension plan with an extended due date of 1 January 2021 will be treated as timely if it is made no later than 4 January 2021 (which is the first business day after 1 January 2021) (Notice 2020-82).
- A KPMG report examines the implications of HM Revenue & Customs (HMRC) guidance that could resolve many issues confronting U.S. multinationals operating in the United Kingdom in flow-through structures.
State and local tax
- A KPMG report provides a summary of states that have mandatory or elective passthrough entity tax regimes in light of IRS Notice 2020-75 (proposed regulations to be issued on the deductibility of state and local tax payments made by passthrough entities).
- The New York State Department of Taxation and Finance issued an advisory opinion concluding that receipts from digital advertisements produced by the taxpayer’s prewritten computer software were subject to sales and use tax.
- In Texas, proposed revisions to the regulation addressing apportionment of margin include changes relating to the rules for sourcing service receipts.
- The Virginia Commissioner of Revenue ruled that a company that prepared meals in airport kitchens and worked with airlines to create meals that were particular to the airline’s requirements was not entitled to the sales and use tax exemption applicable to industrial manufacturing.
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