Taxation

The Internal Revenue Service recently provided excise tax relief for funds taxed as regulated investment companies that were required to increase their gross income because of the new Section 965 transition tax.

As an increasing number of jurisdictions have entered into intergovernmental agreements related to FATCA or agreed to mandate compliance with the OECD common reporting standard, exempt organizations are being asked to classify themselves in subscription agreements and forms provided to the investment vehicles.

On February 9, President Trump signed into law the Bipartisan Budget Act of 2018 which retroactively extended some temporary tax breaks and includes some additional provisions which were left out of the Tax Cuts and Jobs Act of 2017. 

Chapman attorney Paul Carman will be speaking at the 11th Annual Tax Planning Strategies US and Latin America Conference, hosted by the American Bar Association and the International Fiscal Association.

Under 1991 US guidance, if a non-US partner sold its interest in a US partnership, the selling partner would look through to the business of the partnership and would be required to file a US tax return and pay US tax if the partnership would have had income effectively connected to a US trade or business on a deemed sale of its assets. But that guidance was reversed in a tax court case. Then the US position was reversed again in the Tax Cuts and Jobs Act.

For non-US individuals and corporations that invest in real estate within the US, the rules that subject their gains to US federal income tax generally are found under Section 897. The Foreign Investment in Real Property Tax Act rules have often been attacked as a disincentive for overseas investors to enter the US real estate market.

This article describes the impact of the Tax Cuts and Jobs Act on securitization transactions. The article addresses in detail the new limitation on the deduction for business interest expense as well as the requirement that the transferee of an equity interest in a partnership engaged in a US trade or business withhold 10% of the amount realized unless the transferor certifies that it is a US person. 

Although recent legislation commonly referred to as the Tax Cuts and Jobs Act retained Section 956 of the Internal Revenue Code (and its notorious deemed dividend issue), the enactment of other changes may reduce the impact of Section 956 on taxpayers.

On December 22, 2017, President Trump signed into law the most sweeping tax law changes in the last thirty years. Highlights of the new tax reform legislation as they impact individuals are summarized in this Client Alert.

Overlooked in the many discussions about the new tax laws are the consequences on trusts and estates and the high likelihood trusts and their beneficiaries will see larger income tax bills for the next seven years. This Client Alert focuses on how the tax changes will impact trusts and estates, identify some of the significant uncertainties and provide recommendations for fiduciaries.

On December 20, Congress passed the act commonly referred to as the Tax Cuts and Jobs Act of 2017. Although no provision of the Act was designed specifically to address securitization transactions, two new sets of rules are likely to have significant effects on at least some securitization transactions

On December 15, House and Senate conferees reached an agreement on the Tax Cut and Jobs Act and released the final version of the Bill, which is expected to be voted on this week in the House and Senate.

On August 11, the IRS issued Rev. Proc. 2017-45 which allows publicly offered real estate investment trusts and regulated investment companies to make stock distributions that will qualify for the dividends-paid deduction, if certain requirements are met, and therefore enable a RIC or REIT to meet its minimum annual dividend distribution tests. 

Both the House and Senate versions of the Tax Cuts and Jobs Act include a new provision that would impose an excise tax on the compensation paid by certain tax-exempt organizations if the compensation to a covered employee is more than $1 million.

Both the House and Senate versions of the Tax Cuts and Jobs Act include a new provision that would impose an excise tax on the compensation paid by certain exempt organizations, including certain state and local governmental entities, if the compensation to a covered employee is more than $1 million.

On November 2, Representative Brady released the “Tax Cuts and Jobs Act.” On November 9, the Senate Finance Committee released a “Description of the Chairman’s Mark of the ‘Tax Cuts and Jobs Act.’” This summary highlights four provisions in the proposed legislation that will be of particular interest to financial institutions.

On November 2, Representative Brady released the proposed text of the long-awaited federal income tax reform bill. The bill also includes a provision that appears aimed at subjecting public pension plans to unrelated business taxable income.

On November 2, Representative Kevin Brady released the proposed text of the long-awaited federal income tax reform bill. The bill also includes a provision that creates a limit on the deductibility of interest. If enacted, this provision could have potentially wide-reaching impacts on securitization transactions.

On November 2, Representative Brady released the proposed text of the long-awaited federal income tax reform bill. If enacted into law, the bill would eliminate all tax-exempt private activity bonds, tax credit bonds and all tax-exempt advance refunding bonds.

In an environment of growing global mobility of many families and heightened regulatory and compliance pressures, many U.S. estate planning advisors are encountering international issues for their clients with increasing frequency.

On May 1, Tax Notes published a flurry of revocations of private letter rulings that had been issued to regulated investment companies. In each of the revocations, at least one of the rulings requested in the original private letter ruling was that the income from a commodity linked note was qualified income for the purposes of Internal Revenue Code § 851.

The Tax Exempt and Government Entities Division of the Internal Revenue Service announced changes to the information document request process in tax-exempt bond and tax-advantaged bond examinations.

On January 17, 2017, the Internal Revenue Service released new safe harbor guidelines for determining whether a management contract results in private business use of property for purposes of the federal income tax rules relating to tax-exempt bonds.

On August 22, the Internal Revenue Service released new safe harbor guidelines for determining whether a management contract results in private business use of property for purposes of the federal income tax rules relating to tax-exempt bonds.

The Internal Revenue Service issued Notice 2016-10 to address foreign tax credits and regulated investment companies. The Internal Revenue Code does not provide guidance on the question of how a RIC should treat refunds of foreign tax when it has made an election to pass the foreign tax credit to its shareholders. Notice 2016-10 begins to address this question.

UCITS are a type of collective investment vehicle and they may be difficult to fit into existing tax and regulatory schemes. Although UCITS were developed to facilitate cross-border investments, the model U.S. and OECD treaties are only recently beginning to effectively address collective investment vehicles.

In December 2015, Congress passed the Protecting Americans from Tax Hikes Act of 2015, which extended certain federal renewable energy tax credits for projects that began construction prior to the dates set forth in the Path Act. In response to that extension, the IRS has issued additional guidance with respect to a renewable energy facility’s eligibility to receive these tax credits.

The Internal Revenue Service recently released proposed regulations concerning the definition of a “political subdivision” for purposes of tax-exempt financing.

On Oct. 27, 2015, the United States Treasury Department and the Internal Revenue Service published long-awaited final regulations that provide welcome guidance to 501(c)(3) health care organizations that are borrowers of qualified 501(c)(3) bonds.

Private schools that are exempt from federal income taxation must file an annual information return with the IRS concerning their racial nondiscrimination policies. Schools that file the annual information return, Form 990, Return of Organization Exempt from Income Tax may satisfy this annual filing requirement on Schedule E.

Form 5578 is a half-page form simply certifying that a private school has complied with the racial nondiscrimination guidelines set forth by the Internal Revenue Service. The failure of a private school to annually file this form may jeopardize the school's tax-exempt status under Section 501(c)(3).