Insights & News

Tax Insights, June 22, 2016
Tracking Tax News You Need to Know

June 22, 2016

ICI Submits Recommendations for Guidance Priority List
The Investment Company Institute submitted its recommendations for inclusion on the 2016-2017 Guidance Priority List, including, among other items, foreign tax recoveries from European Union Member States under Santander, money market fund reform, FATCA, the RIC Modernization Act of 2010, cost basis reporting and ownership tracking requirements.

IRS Issues Reminder for FBAR Filing Deadline
The IRS has issued a reminder that the due date for filing 2015 Form 114, Report of Foreign Bank and Financial Accounts (FBAR), is Thursday, June 30.

IRS Clarifies Exclusion of COD Income by Real Estate Developers
In Revenue Ruling 2016-15 (2016-26 IRB 1), the IRS held that real property developed and held by a taxpayer who is a sole proprietor is "real property used in a trade or business" for purposes of Section 108(c)(3)(A) if the property is for lease in a leasing business (section references are to the Internal Revenue Code of 1986, as amended), and real property developed and held by a taxpayer who is a sole proprietor is not "real property used in a trade or business" for purposes of Section 108(c)(3)(A) if the property is primarily for sale to customers in the ordinary course of business.

IRS Releases Practice Unit on Penalty for Reporting Failures and Grants to Nonresident Aliens
The IRS made available its international practice unit on the monetary penalty for failures to comply with the Section 6038B(a)(1)(A) reporting requirements for some transfers of property by a U.S. person to a foreign corporation, noting that the penalty should not be asserted if the failure was due to reasonable cause and not willful neglect. The IRS also made available its international practice unit on the U.S. taxation of scholarships and fellowship grants received by nonresident alien students and trainees, income exclusion for qualified scholarships under Section 117, and income tax treaty exemptions.

NYSBA Tax Section Submits Report on U.S. Property Held by CFCs
The NYSBA Tax Section submitted a report commenting on proposed and temporary regulations published by the Treasury and the IRS, regarding the treatment of United States property held by a controlled foreign corporation under Section 956 in connection with certain transactions involving partnerships (the "Proposed Regulations" and "Temporary Regulations," respectively). The NYSBA recommends adding a new de minimis exception to the regulations, pursuant to which an obligation of a foreign partnership would not be treated as an obligation of a U.S. partner if the U.S. partner (and its related persons) owns less than a specified percentage of the profits and capital interests in the foreign partnership. The report makes additional recommendations regarding the Proposed and Temporary Regulations, including applying a liquidation value approach to determine the partners' shares of a partnership obligation, rather than the approach based on the partners' interests in partnership profits in the Proposed Regulations.

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 © 2016 Stradley Ronon Stevens & Young, LLP. All rights reserved.

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