- Rev. Proc. 2019-18 provides a safe harbor for a professional sports team to treat certain personnel contracts and rights to draft players as having a zero value for determining gain or loss to be recognized for federal income tax purposes on the trade of a personnel contract or a draft pick. Both parties to the trade, however, must apply the safe harbor.
- Final regulations concern the arbitrage investment restrictions under section 148 that apply with regard to tax-exempt bonds and other tax-advantaged bonds issued by state and local governments.
- Corrections to final regulations regarding the transition tax under section 965 were released.
- The IRS posted a list of FAQs concerning “negative tax basis” capital account reporting requirements on Form 1065. The FAQs provide answers to questions regarding partnership reporting of negative tax basis capital, and include responses and examples, plus a safe harbor approach for calculating partners’ tax basis capital accounts.
- The IRS updated a FAQ to provide guidance for applying the independence standard for an external reviewer of a QI / WP / WT entity for periodic review years prior to 2019.
- The U.S. Tax Court concluded that a “captive” was not an insurance company, invalided the company’s election under section 831(b), and held premiums received must be recognized as income and premiums paid were not deductible.
- The IRS Large Business and International (LB&I) division publicly released three “practice units” as examiner guidance under the following topics: (1) interest capitalization for self-constructed assets; (2) proper method of accounting for land developers and subcontractors; and (3) tax home for purposes of section 911.
- Comprehensive tax reform legislation enacted in New Mexico includes corporate income tax amendments and gross receipts tax changes.
- More states—Hawaii, Nebraska, New Mexico, Rhode Island, Utah, and West Virginia—acted in response to state sales tax implications of remote or online sales. In certain states, there are tax collection obligations regarding marketplace facilitators or marketplace providers.
- The Georgia Department of Revenue issued a letter ruling concluding that while a Canadian company had no U.S. federal income tax (because it was exempt from tax under the income tax treaty between Canada and the United States), the company nevertheless could still be subject to Georgia corporate income tax by reason of having positive taxable net income (as a result of any additional modifications required under Georgia law).
- Legislation in Idaho was recently enacted that retroactively revises the state’s treatment of IRC section 965 income and “global intangible low-taxed income” (GILTI) and that also conforms to the “foreign-derived intangible income” (FDII) measures.
- In New York, pending legislation includes corporate income tax measures and measures that would extend the top individual income tax rate of 8.82% through 2024.
- The Oregon Tax Court held that wholesalers accepting returns “on behalf of” the taxpayer were not protected from Oregon taxation pursuant to Pub. L. No. 86-272.
Read TaxNewsFlash-United States
- The U.S. House of Representatives passed H.R. 1957, the Taxpayer First Act of 2019. The U.S. Senate would need to pass the bill; and if or when the Senate would consider the bill is uncertain.
Read TaxNewsFlash-Legislative Updates