Insights & News

Tax Insights, December 9, 2015
Tracking Tax News You Need to Know

December 09, 2015

Dividend Equivalent Regulations’ Effective Date Delayed
On Dec. 4, Treasury and the IRS issued correcting amendments to the final regulations under Section 871(m) (T.D. 9734) (section references are to the Internal Revenue Code of 1986, as amended), which were issued in September, eliminating the 2016 effective date (see prior coverage here and here). As amended, Treasury Regulation Sections 1.871-15(d)(2) and (e) now apply to any payment made on or after Jan. 1, 2017, with respect to any transaction issued on or after Jan. 1, 2017.

Income From Natural Gas Processing Is Qualifying Income
In Private Letter Ruling 201548013, the IRS concluded that gross income derived by a limited partnership from the delivery of fluids; provision of inter-well water transfer services; and the processing, treatment and disposal of waste solids and waste fluids will constitute qualifying income for purposes of Section 7704(d)(1)(E). Further, gross income derived by the limited partnership for the provision of hot oiler and superheater services, slurry injection activities, drilling pipe decontamination, washout services, and condensate and battery vapor control services during the exploration for and production of oil and natural gas constitutes qualifying income within the meaning of Section 7704(d)(1)(E). Lastly, gross income derived from the recovery and marketing of hydrocarbons other than to end users at the retail level constitutes qualifying income within the meaning of Section 7704(d)(1)(E).

IRS Updates Publication on REMICs
The IRS released an updated version of Publication 938 (rev. Nov. 2015), Real Estate Mortgage Investment Conduits (REMICs) Reporting Information (And Other Collateralized Debt Obligations (CDOs)), which provides directories relating to REMICs and collateralized debt obligations.

Congress Passes FAST Act With Tax Debt, Passport Provisions
On Dec. 3, Congress passed the Fixing America’s Surface Transportation (FAST) Act, which includes provisions mandating private tax debt collection and providing for forfeit of passports by U.S. citizens who owe large tax debts. The JCT estimated that the bill’s private tax debt collection authorization would yield an additional $2.4 billion to the federal fisc through 2025 and that revocation or denial of passports to some individuals with tax debts of over $50,000 should net the government $395 million through 2025. President Obama signed the FAST Act on Dec. 4.

Tax Court Enters Stipulated Decision in Altera Transfer Pricing Case
Following the Tax Court’s ruling in Altera Corp. et al. v. Commissioner, 145 T.C. No. 3, invalidating the 2003 final cost-sharing regulations in Treasury Regulation Section 1.482-7(d)(2) (see prior coverage here), on Dec. 1 the court issued a stipulated decision, Altera Corp. et al. v. Commissioner; No. 9963-12, that there is a deficiency in income tax due from Altera Corp. for the taxable year ended Dec. 30, 2005, in the amount of $5.5 million.

JCT Summarizes OECD BEPS Project
The Subcommittee on Tax Policy of the House Ways and Means Committee scheduled a public hearing for Dec. 1, 2015, on the Base Erosion and Profit Shifting Project conducted by the Organization for Economic Cooperation and Development at the request of the Group of Twenty (OECD/G20 BEPS Project). In advance of this meeting, the staff of the Joint Committee on Taxation (JCT) released a summary that provides background on the OECD/G20 BEPS Project, an overview of its findings and recommendations, and a discussion of its potential implications for U.S. tax policy.

IRS Releases Several International Practice Units
The IRS made available several of its international practice units on

The practice units are training aids that describe for IRS agents specific international and transfer pricing issues and transactions.

IRS Releases FATCA FFI List Search and Download Tool User Guide
The IRS has released Publication 5147 (rev. Nov. 2015), the Foreign Financial Institution (FFI) List Search and Download Tool, which allows users to search entities on the list by global intermediary identification number, financial institution name, or country of the FFI or branch. The search results may also be downloaded.

District of Columbia Establishes Qualified ABLE Program
District of Columbia Bill 21-0252, signed into law as Act 21-0203, establishes a qualified Achieving a Better Life Experience (ABLE) program to exempt from income taxation the earnings on deposits made to an ABLE program trust to assist an individual with expenses related to the person’s blindness or other disability.

New York Tax Department Explains Corporate Tax Reform Changes for S Corporations
In Memorandum TSB-M-15(7)C,(6)I, the New York Tax Department discusses how tax reform legislation (Part A of Chapter 59 of the Laws of 2014 and Part T of Chapter 59 of the Laws of 2015) significantly amended the Article 9-A apportionment rules and repealed Article 32. Specifically, the memorandum discusses how the changes impact both the computation of the apportionment factor by a New York S corporation and the determination of New York source income by Article 22 nonresident and part-year resident shareholders of New York S corporations for S corporation tax years beginning on or after Jan. 1, 2015.

Information contained in this publication should not be construed as legal advice or opinion or as a substitute for the advice of counsel. The articles by these authors may have first appeared in other publications. The content provided is for educational and informational purposes for the use of clients and others who may be interested in the subject matter. We recommend that readers seek specific advice from counsel about particular matters of interest.

Copyright © 2015 Stradley Ronon Stevens & Young, LLP. All rights reserved.

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