Last January, the European Commission (COM (2016) 26 final)(2016/011 (CNS)) proposed for Council action rules against tax avoidance practices to fight against tax avoidance and aggressive tax planning, both at the global and EU levels. This fight has been ongoing for several years now and is reflected in part by the BEPS project of the OECD which was recently finalized and adopted by the G20. The schemes targeted by this Directive involve situations where taxpayers act against the actual purpose…
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On October 5, 2016 the Internal Revenue Service and the Treasury issued Final and Temporary Regulations (T.D. 9788) pertaining to how liabilities are to be allocated and treated for purposes of applying the disguised sales rules under section 707 and when certain obligations will be as a recourse liability under section 752. Shortly thereafter, new proposed regulations (REG-122855-15) withdrew a portion of the recent rule-making to the extent not adopted in the final regulations and contain new…
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On December 12, 2016, the Service (and Treasury) issued Final Regulations in T.D. 9796 on the treatment of certain domestic entities that are disregarded from their owners as corporations for purposes of Section 6038A.
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As part of The Bipartisan Budget Agreement of 2015, which the President signed into law on November 2, 2015, Congress repealed the complex and much-criticized partnership entity-level audit (“ELA”) rules under the Tax Equity and Fiscal Responsibility Act of 1982 (“TEFRA”), including the electing large partnership rules. The new law replaces the ELA rules with a set of “streamlined” entity-level audit (“SELA”) rules designed to enhance the IRS’s ability to audit more large partn…
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The presidential election is history and Donald J. Trump is President-elect. We all know that Mr. Trump has promised substantial reductions in the federal income tax rates applicable to both individuals and businesses in a major effort to stimulate our economy and provide for GDP growth in excess of 3.5% each year. His vision is to create 25 million new jobs over the next ten years. The outline of his proposals on federal taxation (the “Trump Tax Plan”) would further increase the standard de…
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In a press release of August 30, 2016 issued by the European Commission, the Commission held that Ireland granted undue tax benefits of up to €13 billion to Apple pursuant to an agreement (rulings) that it entered into with Apple in 1991. This was “improper illegal aid” in clear violation of the EU state aid rules which state quite simply that “Member States cannot give tax benefits to selected companies..”. See Article 107(1) of the Treaty on the Functioning of the European Union (TFE…
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Berkshire 2006-5, LLC, et al, v. Commissioner, T.C. Memo. 2016-25 (Buch, J.). The TEFRA partnership entity level audit rules are still with us for at least 5 years and cases will continue to be decided under the TEFRA legislation enacted in 1982. Under the new centralized partnership audit rules, which generally go into effect for partnership taxable years commencing in 2018, the ability of a notice partner to intervene in a partnership audit, appeal or in litigation will be denied. Under TEFRA…
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On April 4, 2016, the Treasury and the Internal Revenue Service issued proposed regulations on the treatment of certain interests in corporations as stock or indebtedness, or as partly stock and debt. REG-108060-15.[1] One of the stated purposes of the proposed regulations was to follow through on the anti-earnings stripping guidance that was issued by the Service in Notice 2014-62, 2014-42 IRB 712 (10/14/2014) and Notice 2015-79, 2015-49 IRB 775 (12/7/2015) to guard against post-inversion earni…
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Introduction All countries, including underdeveloped countries, are well aware of the strain that has been placed on tax administrators throughout the world in grappling with the billions if not trillions of revenue loss associated with base erosion techniques and strategies utilized by many multinational business enterprises (MNEs) that are principally driven by tax avoidance and not primarily based on sound business practices. This base erosion is visibly greater when comparing the aggregate t…
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There is much irony in the US Chamber of Commerce’s desire to prevent the Treasury and the current Administration from stopping inversions, at least unilaterally, by asking a Federal District Court to hold a part of the temporary regulations on inversions invalid. Viewed from a narrow lens of legality (and not legality and tax policy) the recently issued temporary (anti-inversion) regulations stray beyond permitted boundaries of proper rule-making. But looking through a wider lens into tax pol…
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