The Bipartisan Budget Act of 2015, which President Obama signed into law on November, 2015, repealed the complex and much-criticized TEFRA partnership entity-level audit rules, including the electing large partnership rules. On December 18, 2015, Congress passed, and President Obama signed into law, the Protecting Americans From Tax Hikes (PATH) Act of 2015. This act sets forth certain corrections to the new audit rules. In this course, Jerald David August and Megan L. Brackney will review the u…
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Last Summer, in Notice 2015-54, 2015-34 I.R.B. 210, the Treasury and the Internal Revenue Service announced their intention to issue regulations under Section 721(c) to ensure that, when a U.S. person transfers certain types of property to a partnership that has foreign partners related to the transferor, income or gain attributable to the property will be taken into account by the transferor either immediately or periodically. The Treasury Department and the Service further announced their inte…
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Summons Enforcement Action Against Facebook Filed In Federal District Court The government recently filed a summons enforcement proceeding on July 6, 2016, in The United States District Court for the Northern District of California against Facebook Inc., 16-cv-o3777.[1] The enforcement action taken by the government became necessary since the taxpayer recently refused to turn over summoned tax and business records related to Facebook’s transfer of its global rights of many of its intangible as…
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On June 29, 2016, the Treasury and the Internal Revenue Service published final regulations (T.D. 9733) requiring annual country-by- country (CbC) reporting by U.S. persons that are the ultimate parent entity of a multinational enterprise group (MNE) with annual revenue for the preceding accounting period of $850 million or more. The regulations are effective on June 30, 2016, and made several changes to the proposed regulations issued last December.
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In a recent Tax Court Memorandum decision, Medtronic, Inc. et al v. Commissioner, T.C. Memo 2016-112, Judge Kathleen Kerrigan, in a long and detailed opinion, rejected the IRS’ method invoked Section 482, for reallocating over well in excess of one billion dollars in income over a two year period between a U.S. parent corporation, Medtronic U.S., and its wholly owned subsidiary, Medtronic Puerto Rico Operations Co. (MPROC) with respect to revenues from several licenses for intellectual propert…
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Last Summer the Service issued a set of proposed regulations with respect to Section 707(a)(2)(A). This provision involves an arrangement where: (i) involving a partner who provides services (or transfers property) to a partnership; (ii) there is a related direct or indirect allocation and distribution to that partner; and (iii) the performance of the services (or transfer of property) and the allocation and distribution, when viewed together, are in substance compensation for the performance of…
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Prior to the Christmas recess, five leading Democrat Senators, Reed (D-R.I.), Hirono (D-Hawaii), Baldwin (D-Wis.) Durbin (D-Ill.) and retiring Carl Levin (D-Mich) delivered a letter to the IRS asking the National Office to address several types of transactions that companies have used in connection with an inversion in. The Senators want the Treasury and IRS to issue new rules to further prevent or reduce earnings stripping, the use of so-called ‘hopscotch’ loans and the avoidance of…
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