­

February 2021

Additional Final Regulations on Section 163(j) Issued

The IRS has issued final regulations providing additional guidance on the limitation on the deduction for business interest under Code Sec. 163(j). The regulations finalize various portions of the proposed regulations issued in 2020 with few modifications. They address the application of the limit in the context of calculating adjusted taxable income (ATI) with respect to depreciation, amortization, and depletion. […]

Final Regulations Address Deductibility of Fines and Penalties

The IRS has released final regulations that address the changes made to Code Sec. 162(f) by the Tax Cuts and Jobs Act (TCJA) ( P.L. 115-97), concerning the deduction of certain fines, penalties, and other amounts. The final regulations also provide guidance relating to the information reporting requirements for fines and penalties under Code Sec. 6050X.

The final regulations adopt proposed […]

Safe Harbor for Electing Real Property Trade or Business

The IRS has provided a safe harbor allowing a trade or business that manages or operates a qualified residential living facility to be treated as a “real property trade or business” solely for purposes of qualifying to make the Code Sec. 163(j)(7)(B) election. This guidance formalizes the proposed safe harbor issued in Notice 2020-59, I.R.B. 2020-34, 782. Taxpayers may apply […]

Final Regulations Released on Small Business Simplified Accounting Rules

The IRS has released final regulations addressing the post-2017 simplified accounting rules for small businesses. The final regulations adopt and modify proposed regulations released in August 2020.

Implementation of the Rules

The Tax Cuts and Jobs Act ( P.L. 115-97) put in place a single $25 million gross receipts test for determining whether certain taxpayers qualify as small taxpayers that can use […]

January 2021

Final Regs Define “Real Property” for Like-Kind Exchanges

Final regulations clarify the definition of “real property” that qualifies for a like-kind exchange, including incidental personal property. Under the Tax Cuts and Jobs Act (TCJA, P.L. 115-97), like-kind exchanges occurring after 2017 are limited to real property used in a trade or business or for investment.

The final regulations largely adopt regulations that were proposed in June ( NPRM REG-117589-18). However, they also:

add […]

PPP Deduction Safe Harbor if Loan Not Forgiven

The IRS has released rulings concerning deductions for eligible Paycheck Protection Program (PPP) loan expenses. The rulings:

deny a deduction if the taxpayer has not yet applied for PPP loan forgiveness, but expects the loan to be forgiven; and
provide a safe harbor for deducting expenses if PPP loan forgiveness is denied or the taxpayer does not apply for forgiveness.

Background
In […]

Final Regulations Address Transportation Fringe Benefits

The IRS has issued final regulations under Code Sec. 274 relating to the elimination of the employer deduction of for transportation and commuting fringe benefits by the Tax Cuts and Jobs Act ( P.L. 115-97), effective for amounts paid or incurred after December 31, 2017. The final regulations address the disallowance of a deduction for the expense of any qualified transportation fringe (QTF) […]

IRS Spotlights Upcoming Tax Filing Season

As part of a series of reminders, the IRS has urged taxpayers get ready for the upcoming tax filing season. A special page ( https://www.irs.gov/individuals/steps-to-take-now-to-get-a-jump-on-next-years-taxes), updated and available on the IRS website, outlines steps taxpayers can take now to make tax filing easier in 2021.

Taxpayers receiving substantial amounts of non-wage income like self-employment income, investment income, taxable Social Security benefits and, […]

IRS Warns Taxpayers and Tax Professionals Against Scams and Identity Theft Schemes

This year marks the 5th Annual National Tax Security Awareness Week-a collaboration by the IRS, state tax agencies and the tax industry. The IRS and the Security Summit partners have issued warnings to all taxpayers and tax professionals to beware of scams and identity theft schemes by criminals taking advantage of the combination of holiday shopping, the approaching tax season […]

IRS Proposes Regs on Centralized Partnership Audit Regime

NPRM REG-123652-18

The IRS has issued proposed regulations for the centralized partnership audit regime that:

clarify that a partnership with a QSub partner is not eligible to elect out of the centralized audit regime;
add three new types of “special enforcement matters” and modify existing rules;
modify existing guidance and regulations on push out elections and imputed adjustments; and
clarify rules […]

Final Regs on Silo Rules for Calculating UBTI

The IRS has issued final regulations with guidance on how a tax-exempt organization can determine whether it has more than one unrelated trade or business, how it should identify its separate trades and businesses, and how to separately calculate unrelated business taxable income (UBTI) for each trade or business – often referred to as “silo” rules. Since 2018, under provisions of the […]

IRS Extends Term of Gaming Industry Tip Compliance Agreement

The IRS has modified Rev. Proc. 2007-32, I.R.B. 2007-22, 1322, to provide that the term of a Gaming Industry Tip Compliance Agreement (GITCA) is generally five years, and the renewal term of a GITCA is extended from three years to a term of up to five years. A GITCA executed under Rev. Proc. 2003-35, 2003-1 CB 919 and Rev. Proc. 2007-32 will remain in […]

Final Regulations Coordinate Code Sec. 245A DRD Limit and GILTI Disqualified Basis Rule

Final regulations issued by the Treasury and IRS coordinate the extraordinary disposition rule that applies with respect to the Code Sec. 245A dividends received deduction and the disqualified basis rule under the Code Sec. 951A global intangible low-taxed income (GILTI) regime. Information reporting rules are also finalized.

Extraordinary Disposition Rule and GILTI Disqualified Basis Rule
The extraordinary disposition rule (EDR) in Reg. §1.245A-5 and the GILTI disqualified basis […]

December 2020

IRS Releases 2021 Inflation-Adjusted Tax Tables, Standard Deduction, AMT and Other Amounts

The IRS has released the annual inflation adjustments for 2021 for the income tax rate tables, and for over 50 other tax provisions. The IRS makes these cost-of-living adjustments (COLAs) each year to reflect inflation.

2021 Income Tax Brackets
For 2021, the highest income tax bracket of 37 percent applies when taxable income hits:

$628,300 for married individuals filing jointly and surviving […]

2021 Inflation Adjustments for Pension Plans, Retirement Accounts Released

The IRS has released the 2021 cost-of-living adjustments (COLAs) for pension plan dollar limitations and other retirement-related provisions.

Key Unchanged Amounts
The 2021 contribution limit remains unchanged at $19,500 for employees who take part in:

401(k) plans,
403(b) plans,
most 457 plans, and
the federal government’s Thrift Savings Plan

The catch-up contribution limit for employees aged 50 and over who participate in these […]

Supreme Court Hears Oral Arguments in ACA Challenge

The U.S. Supreme Court heard oral arguments in California v. Texas, the latest challenge to the Affordable Care Act (ACA). The ACA expanded insurance coverage, and includes popular provisions such as required coverage of preexisting medical conditions.

Three major issues are at play in this case:

Do the plaintiff challengers of ACA—two individuals, the Trump Administration, and a number of states led […]

Guidance for Applying New, Proposed Bonus Depreciations Regs

The IRS has provided guidance to taxpayers that want to apply either Reg. §1.168(k)-2 and Reg. §1.1502-68, or want to rely on proposed regulations under NPRM REG-106808-19, for:

certain depreciable property acquired and placed in service after September 27, 2017, by the taxpayer during its tax years ending on or after September 28, 2017, and before the taxpayer’s first tax year that begins on […]

Life Expectancy and Distribution Period Tables for RMDs Updated

The IRS has issued final regulations to update the life expectancy and distribution period tables under the required minimum distribution (RMD) rules. The tables reflect the general increase in life expectancy. The tables would apply for distribution calendar years beginning on or after January 1, 2022, with transition relief.

RMDs apply to qualified plans, including 401(k) plans and profit sharing plans. […]

Guidance on Form W-2 Reporting of Deferred Employee Tax

The IRS has released guidance on its website for employers and employees regarding deferral of employee Social Security tax under Notice 2020-65, I.R.B. 2020-38, 567.

In August, the IRS issued Notice 2020-65 in response to a Presidential Memorandum that allowed deferral of the withholding, deposit, and payment of certain employee payroll tax obligations. The Notice allows employers the option to defer the employee portion […]

Proposed Regs Address State and Local Tax Payments by Partnerships, S Corporations

The IRS intends to issue proposed regulations to clarify that state and local income taxes imposed on and paid by a partnership or an S corporation are deductible by the partnership or S corporation in computing non-separately stated taxable income for the year of the payment. The proposed regulations are intended to provide certainty to individual partners and S corporation […]

November 2020

Social Security Wage Cap and Benefit Amounts Increase for 2021

For 2021, the Social Security tax wage cap will be $142,800, and Social Security and Supplemental Security Income (SSI) benefits will increase by 1.3 percent. These changes reflect cost-of-living adjustments to account for inflation.

2021 Wage Cap
The Federal Insurance Contributions Act (FICA) tax on wages is 7.65 percent each for the employee and the employer. FICA tax has two components:

a […]

IRS Finalizes 100 Percent Bonus Depreciation Regulations

The IRS has adopted previously issued proposed regulations ( REG-106808-19) dealing with the 100 percent bonus depreciation deduction. In addition, some clarifying changes have been made to previously issued final regulations ( T.D. 9874). Changes to the proposed and earlier final regulations are largely in response to various comments submitted by practitioners, and generally relate to:

the definition of qualified used property;
[…]

Final Regulations Reflect TCJA Changes to Entertainment and Meal Deductions

Final regulations reflect the significant changes that the Tax Cuts and Jobs Act (TCJA) ( P.L. 115-97) made to the Code Sec. 274 deduction for travel and entertainment expenses. These regulations finalize, with some changes, previously released proposed regulations, NPRM REG-100814-19.

Changes to Code Sec. 274 under the TCJA
For most expenses paid or incurred after 2017, TCJA:

repealed the “directly related to a trade or […]

Final Regulation Addresses Tax Withholding on Certain Periodic Retirement and Annuity Payments

The IRS has issued a final regulation addressing tax withholding on certain periodic retirement and annuity payments under Code Sec. 3405(a), to implement amendments made by the Tax Cuts and Jobs Act ( P.L. 115-97) (TCJA). The regulation affects payors of certain periodic payments, plan administrators that are required to withhold on such payments, and payees who receive such payments. The final […]

IRS Issues Final Regulations on Wage Withholding, Redesigned W-4

The IRS has issued final regulations that provide guidance for employers on federal income tax withholding from employees’ wages. The final regulations:

address the amount of federal income tax that employers withhold from employees’ wages;
implement changes made by the Tax Cuts and Jobs Act (TCJA) ( P.L. 115-97); and
reflect the redesigned Form W-4, Employee’s Withholding Certificate, and related IRS publications.

TCJA […]

Load More Posts