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1. Final rules issued on bona fide indebtedness and terminating partnership’s startup expenses   WebExclusive

BY Sally P. Schreiber, J.D.
On Tuesday, the IRS issued T.D. 9682, which finalized proposed regulations relating to basis of indebtedness of S corporations to their shareholders that provide that S corporation shareholders increase their basis of indebtedness of the S corporation to the shareholder only if the indebtedness is bona fide, which is determined under general Federal tax principles and depends upon all of the facts and circumstances.

2. New rules on covered asset acquisitions will shut down transactions to avoid Sec. 901(m)   WebExclusive

BY Sally P. Schreiber, J.D.
In Notice 2014-44, the IRS announced that it would issue regulations to prevent taxpayers from misapplying the statutory disposition rule in cases where the gain or loss from the disposition of the relevant foreign asset (RFA) is recognized for U.S. income tax purposes but not for foreign income tax purposes.

3. Definitions of R&E expenditures are amended under final rules   WebExclusive

BY Sally P. Schreiber, J.D.
The IRS issued final regulations on which amounts paid or incurred in connection with the development of tangible property, including pilot models, qualify for the Sec. 174 deduction (or amortization) for research and experimental expenditures (T.D. 9680). The regulations finalize proposed rules issued last September (REG-124148-05), with a few changes in response to comments.

4. Effective date of fiduciary fee unbundling rules delayed until 2015   WebExclusive

BY Sally P. Schreiber, J.D.
In response to a comment that the current effective date of the new rules on fiduciary fees does not give fiduciaries enough time to implement them, the IRS amended T.D. 9664 to delay the date. As a result, the new rules governing which costs of trusts and estates are subject to the 2% floor on miscellaneous deductions now apply to tax years beginning after Dec.

5. Partnership interest expense allocation rules are finalized   WebExclusive

BY Sally P. Schreiber, J.D.
The IRS has finalized, without substantive changes, proposed regulations that were issued in conjunction with temporary regulations in January 2012. The final regulations make permanent four changes to the rules for allocating and apportioning interest expense for partners in partnerships (T.D. 9676). The first change is to the method for apportioning interest expense for corporate partners whose interest in the partnership is 10% or more.

6. The Sec. 4980H assessable payment for large employers  

BY Benjamin Pruett, J.D.
Employers near the threshold of 50 full-time and full-time-equivalent employees (FTEs) or with a high proportion of seasonal workers should be taking measures now to record employees’ daily hours of service and other data relevant to the Sec. 4980H assessable payment for large employers regarding minimum essential health coverage.

7. Rollover of gains on certain property dispositions   CPEDirect

BY John W. McKinley, CPA, CGMA, J.D., LL.M. and Craig J. Wright
A little-known provision of the Code is Sec. 1044, which allows certain taxpayers to defer recognition of gain on the sale of publicly traded securities that is reinvested into specialized small business investment companies (SSBICs). When taxpayers later dispose of interests in SSBICs, important tax implications can arise from the interrelationship of Sec.

8. Trust can be a real estate professional   CPEDirect

BY Charles J. Reichert, CPA
Trustees performing services on a trust’s behalf qualify the trust for the exception for real estate professionals to the passive activity loss disallowance.The Tax Court held that a trust’s rental losses could be currently deducted since the trust qualified as a real estate professional. According to the court, the passive loss rules’ legislative history does not prevent a trust from being a real estate professional, as long as the trust materially participates in the activity.

9. Employment tax responsibilities of designated payer agents  

BY Alistair M. Nevius, J.D.
New rules clarify tax responsibilities when an employer designates an agent to pay its employees. The IRS issued final regulations on the liability for employment taxes when an employer designates an agent under a “service agreement” to pay its employees and to satisfy its employment tax obligations instead of following normal IRS procedures to designate an agent.

10. Country-by-country reporting by multinationals  

BY Alistair M. Nevius, J.D.
The Organisation for Economic Co-operation and Development (OECD) has recently been advocating for increased tax transparency and for international cooperation to prevent tax avoidance. One element of this international cooperation that the OECD would like to see implemented is country-by-country income and tax reporting by multinational corporations. Country-by-country reporting would be a boon for tax administrators, but it has the potential to be a compliance nightmare for companies.The OECD’s plan would require multinational companies to report both their income and the taxes they pay to the governments of each country in which they operate, thus allowing those
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