Tax News & Opinion

Distribution by former S corporation is part dividend

In Rev. Rul. 2019-13, the IRS ruled that a distribution to the sole shareholder of a C corporation was partly a recovery of the former S corporation’s accumulated adjustments account (AAA) and a taxable dividend for the remaining distribution. The company involved was originally a C c…

IRS changes maximum-vehicle-value rule

The IRS intends to revise its regulations to make them consistent with the recent statutory changes to the automobile price inflation adjustment in Sec. 280F(d)(7), which affect the vehicle value that applies when valuing employees’ personal use of employer-provided vehicles (Notice 20…

Proposed rules would govern withholding on transfers of partnership interests

The IRS issued proposed regulations (REG-105476-18) on the operation of new Sec. 1446(f), which requires withholding on the transfer of a partnership interest described in Sec. 864(c)(8) (gain or loss of foreign persons from the sale or exchange of certain partnership interests). Sec. 1446(f…

More proposed regs. on qualified opportunity funds issued

The IRS issued more proposed regulations (REG-120186-18) on Sec. 1400Z-2, a new provision added by the law known as the Tax Cuts and Jobs Act, P.L. 115-97, that establishes qualified opportunity funds (QOFs) to encourage investments in low-income communities. Sec. 1400Z-2 offers three federa…

Can a state tax a trust based on the beneficiary’s residency?

On Tuesday, the U.S. Supreme Court heard oral arguments in the case of North Carolina Dep’t of Rev. v. Kimberley Rice Kaestner 1992 Family Trust, No. 18-457 (U.S.). The case involves a North Carolina statute (N.C. Gen. Stat. §105-160.2) that allows a trust to be taxed so…

Safe harbor issued for valuing pro sports trades

Professional sports teams that trade player contracts or draft picks will not have to value the contracts or draft picks when determining their gain or loss on the trade under a safe harbor issued by the IRS on Thursday (Rev. Proc. 2019-18). The guidance allows teams to treat certain personn…

AICPA asks government to issue more QBI deduction guidance

On April 9, Annette Nellen, the chair of the AICPA Tax Executive Committee, sent a letter to Treasury and to the IRS Chief Counsel’s Office asking for additional guidance on the Sec. 199A deduction for qualified business income (QBI) beyond the corrected final regulations (T.D. 9847) a…

Tax treatment of state and local tax refunds clarified

Rev. Rul. 2019-11, issued Friday, the IRS addressed how the long-standing tax benefit rule interacts with the new $10,000 limit on deductions of state and local taxes to determine the portion of any state or local tax refund that must be included on the taxpayer's federal income tax return. …

Procedure for obtaining EINs to change May 13

Beginning May 13, the IRS will accept employer identification number (EIN) applications only from individual taxpayers who have either a Social Security number or an individual taxpayer identification number as the responsible party on the EIN application, the IRS announced on Wednesday (IR-…

Final rules issued on penalty for nondisclosure of reportable transactions

The IRS on Tuesday issued guidance regarding the amount of the Sec. 6707A penalty for failure to disclose reportable transaction information (T.D. 9853). Tuesday’s final regulations adopt a definition of “decrease in tax” for Sec. 6707A purposes and provide guidance for sit…