Insights & News

Tax Insights, April 18, 2018
Guidance Issued on Remedial Actions for Exempt Bonds

April 18, 2018
Publications
IRS Releases Guidance on Remedial Actions for Nonqualified Use of Exempt Bonds
The IRS released Revenue Procedure 2018-26, 2018-18 IRB, which provides certain remedial actions that issuers of state and local tax-exempt bonds and other tax-advantaged bonds may take to preserve the tax-advantaged status of these bonds when nonqualified uses of the bond proceeds occur. Nonqualified use means a failure to spend proceeds of tax-advantaged bonds within any required expenditure period specified in the applicable Internal Revenue Code section and any use of expended proceeds of tax-advantaged bonds for a purpose other than a qualified use (i.e., a use required or permitted by the applicable Internal Revenue Code section).

Court Rules State Grants Included in Partnership Income
The District Court for the Western District of New York held, in Uniquest Delaware LLC (DC NY 3/27/2018), that a partnership must include in income $11 million of state grants received to help restore and develop a property it owned. The grants were gross income, not a discount or rebate on the purchase of the property.

Court Rules on Standard for Demonstrating FBAR Violation
The District Court for the District of Connecticut held, in U.S. v. Garrity, (DC CT, 4/3/2018), that the IRS may prove that the taxpayer failed to timely file a Report of Foreign Bank and Financial Accounts (FBAR) by a preponderance of the evidence instead of by a higher, clear and convincing evidence standard. The court also determined that the IRS could show willfulness on the taxpayer’s part by proof of reckless conduct and did not need to show an intentional violation of a known legal duty.

IRS Releases Publication on Calculation of Deemed Repatriation Transition Tax
The IRS has released Publication 5292 (How to Calculate Section 965 Amounts and Elections Available to Taxpayers). Section 965, which was amended by the Tax Cuts and Job Act of 2017, requires certain foreign corporations to increase their subpart F income for their last tax year that begins before Jan. 1 by the amount of their deferred foreign income. Publication 5292 provides a workbook and instructions to assist in calculating “section 965 amounts” and also includes worksheets for taxpayers who may be able to make certain elections with respect to Section 965. (Section references are to the Internal Revenue Code of 1986, as amended (the Code).)

IRS Issues Updated Transition Tax FAQ
The IRS has updated its list of frequently asked questions on the Section 965 transition tax, adding questions and answers on reporting obligations in connection with the new provision, on who can make an election and on the IRS’s application of a taxpayer’s 2017 estimated tax payments to net tax liability under Section 965.

IRS Releases Additional International Practice Units
The IRS released additional international practice units on:

Pennsylvania Releases Unclaimed Property Annual Reporting Booklet
The Pennsylvania Treasury released the Pennsylvania Unclaimed Property Annual Reporting Booklet for 2017. The booklet informs businesses of their reporting obligations and includes mailing instructions, instructions on preparing reports of abandoned and unclaimed property (including information on who must report, dormancy periods, early remittance, reporting methods, negative reporting and due diligence guidelines), instructions on delivering securities to the state treasurer, and specific instructions on reporting and delivering tangible personal property.

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 © 2018 Stradley Ronon Stevens & Young, LLP. All rights reserved.

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