Newsletters

Final Regulations Reflect CARES Act Impact on FDII, GILTI, and FTC Transition Carryback Rules

The Treasury and IRS have issued final regulations addressing the calculation of qualified business asset investment for qualified improvement property, under the alternative depreciation system (ADS), for purposes of the Code Sec. 250 deduction (for foreign-derived intangible income and Code Sec. 951A global intangible low-taxed income (GILTI)) and for purposes of determining GILTI.

The regulations also contain transition rules relating to the impact of loss accounts on net operating loss carrybacks allowed under the Coronavirus Aid, Relief, and Economic Security Act (P.L. 116-136) (the “CARES Act””).

Treatment of Qualified Improvement Property Under Code Secs. 250 and 951A
The regulations clarify that the technical amendments to Code Sec. 168 made by section 2307(a) of the CARES Act apply to determine the adjusted basis of property under Code Sec. 250 and Code Sec. 951A. The CARES Act classified qualified improvement property as 15-year property with a 20-year recovery period, for purposes of ADS. The rule is treated as effective December 22, 2017. The ADS rules used for determining qualified business asset investments are the rules in effect on December 22, 2017.

NOL Carrybacks
The CARES Act allowed taxpayers to carryback for five years, NOLs incurred in 2018 through 2020. The regulations provide rules analogous to the existing transition rules in Reg. §1.904(f)-12(j) to situations involving an NOL arising in a post-2017 tax year that is carried back to a pre-2018 tax year. The rules of Reg. §1.904(g)-3(b) apply to the NOL carryback, and income in a pre-2018 separate category in the tax year to which the NOL is carried back is generally treated as if it included only income that would be assigned to the same separate category in post-2017 tax years.

Therefore, any separate limitation loss created by reason of a passive category component of a post-2017 NOL that is carried back to offset pre-2018 general category income will be recaptured in post-2017 tax years as general category income, and not as a combination of post-2017 general, foreign branch, or Code Sec. 951A category income. Losses will first ratably offset a taxpayer’s general category income in the carryback year, to the extent thereof, and that no separate limitation loss account will be created as a result of that offset. The amount of income in the general category available to be offset under this rule is determined after first offsetting the general category income in the carryback year by a post-2017 NOL component in the general category that is carried back to the same year.

PFIC Rules
Proposed regulations under Code Sec. 1297 and Code Sec. 1298, for determining whether a foreign corporation is treated as a passive foreign investment company (PFIC) and the treatment of income and assets of a qualifying insurance corporation that is engaged in the active conduct of an insurance business, were not finalized.

The Treasury and IRS intends to finalize the regulations separately.

FL - Solid mineral tax rates for 2024 announced

Florida has released the severance tax rates on the production of heavy minerals and other solid minerals for 2024. From […]

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FL - Solid mineral tax rates for 2024 announced

IRS Provides Waiver for Taxpayers Failing to Meet Foreign Earned Income Requirements, Rev. Proc. 2024-17

The IRS has provided a waiver for any individual who failed to meet the foreign earned income or deduction eligibility requirements of Code Sec. 911(d)(1) because adverse conditions in a foreign country […]

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IRS Provides Waiver for Taxpayers Failing to Meet Foreign Earned Income Requirements, Rev. Proc. 2024-17

ERC Compliance Efforts Top $1 Billion in Six Months, IR-2024-78

The IRS announced that compliance efforts around erroneous Employee Retention Credit (ERC) claims have topped more than $1 billion within six months. “We are encouraged by the results so far of […]

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ERC Compliance Efforts Top $1 Billion in Six Months, IR-2024-78

IRS Provides Guidance on Replacement of Certain Lead Service Lines, Announcement 2024-10

The IRS has announced the federal income tax treatment of certain lead service line replacement programs for residential property owners. It is required by the federal and many […]

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IRS Provides Guidance on Replacement of Certain Lead Service Lines, Announcement 2024-10

IRS Releases Guidance on Form 1099-K, FS-2024-7; IR-2024-5

The IRS has released guidance to help taxpayers understand what to do with Form 1099-K. Responding to feedback from taxpayers, tax professionals and payment processors, […]

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IRS Releases Guidance on Form 1099-K, FS-2024-7; IR-2024-5

Treasury Department's AI-Powered Fraud Detection Yields $375 Million Recovery

The Treasury Department‘s Office of Payment Integrity (OPI) deployed Artificial Intelligence(AI)-based fraud detection at the onset of Fiscal Year 2023, resulting in the recovery of over $375 million. […]

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Treasury Department's AI-Powered Fraud Detection Yields $375 Million Recovery

FL - Senate approves IRC conformity changes

The Florida Senate approved a tax bill that changes the corporate income tax IRC conformity tie-in date. H.B. 7073, as […]

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FL - Senate approves IRC conformity changes

FL - House passes bill that modifies IRC conformity date

Florida House of Representatives passed a bill with a provision that modifies the IRC conformity tie-in date for determining corporate […]

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FL - House passes bill that modifies IRC conformity date

FinCEN Issues Guidance on Inflation Adjustments to Civil Monetary Penalties

The Financial Crimes Enforcement Network (FinCEN) issued guidance on inflation adjustments to its civil monetary penalties as mandated by the Federal Civil Penalties Inflation Adjustment Act of 1990 (the Act), as amended. This rule […]

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FinCEN Issues Guidance on Inflation Adjustments to Civil Monetary Penalties

FL - IRC conformity update, disability employment credit proposed

Legislation introduced in the Florida House of Representatives proposes to: update the IRC conformity tie-in date for determining corporate income […]

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FL - IRC conformity update, disability employment credit proposed