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Tax Blawg

Tax Talk for Tax Pros

Introduction

Welcome to TaxBlawg, a resource for news and analysis of current legal issues facing tax practitioners. Although blawg.com identifies nearly 1,400 active “blawgs,” including 20+ blawgs related to taxation and estate planning, the needs of tax professionals have received surprisingly little attention. The Wall Street Journal's Tax Blog gives “tips and advice for filers,” and Paul Caron’s legendary TaxProf Blog is an excellent clearinghouse for academic and policy-oriented news. Yet, tax practitioners still lack a dedicated resource to call their own. For those intrepid souls, we offer TaxBlawg, a forum of tax talk for tax pros.

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Posts in Legislation.

Senator Carl Levin (D-Mich.) may have tried to take a bite out of Apple (AAPL) in congressional hearings last May examining the company’s overseas tax structure, calling it “the holy grail of tax avoidance." However, it appears that more than just Irish eyes are smiling on the company these days, for in the eyes of the SEC, Apple’s efforts to minimize its tax burden are just fine thank you.  See e.g., O'Brian, Chris, "SEC reveals review of Apple's Irish tax disclosures." Los Angeles Times, 3 Oct. 2013, LATimes.com, 9 Oct. 2013.

But is that the happy end of the story for Apple and the ...

It has been universally reported that under the newly passed American Taxpayer Relief Act of 2012, net capital gain tax rates have risen to 20% for taxpayers with taxable income greater than $400,000 for single filers and $450,000 for joint filers.  To clarify this broad statement, under section 102 of the new law, the higher capital gains rate applies only to the gain that, when added to other taxable income, exceeds the threshold amounts.  Taxpayers below the 39.6% taxable income threshold before capital gains are taken into account will have their capital gains taxed at 15% up to the ...

With the looming increase in tax rates on investment income and capital gains in particular, a large number of stock market investors have been selling long-term positions to lock in the 2012 rate, which currently tops out at 15%.  Come January 1,2013, gain on the same sale could be taxed at a rate as high as 23.8%, consisting of a long-term capital gains tax rate of 20% plus a Medicare surtax of 3.8% imposed on joint filers with AGI greater than $250,000 and single filers with AGI greater than $200,000.  (See Internal Revenue Code § 1411).

A question attracting attention as the year draws to a ...

Pennsylvania may soon join the other states that have challenged the use of the so-called Delaware Loophole, according to our colleagues at the State and Local Tax Blawg.  The legislation, contained in Pa. House Bill 2150, would disallow deductions that a parent operating corporation claims for royalty payments made to a "Delaware Holding Company."

The new limitation would not apply where the transaction is related to "a valid business purpose."  In this regard, the legislation defines a valid business purpose as, “[a] purpose, other than the avoidance or reduction of taxation ...

Following the Supreme Court’s decision in Mayo Foundation v. United States, in which the Court ruled that tax regulations receive deference from courts under the Chevron doctrine that applies to non-tax regulations, many commentators acknowledged the decision’s anticipated impact on disputes about the validity of tax regulations.  The new standard gives the IRS much wider latitude in issuing regulations that fill gaps caused by statutory ambiguities. In our prior discussions of the decision, we speculated:

The IRS may be wise to keep in mind that neither it, nor the courts ...

Recalling one of our first blawg posts, the topic of tax reform could be described in much the same terms as the codification of economic substance (prior to its codification, anyway): "a cousin of Bigfoot and the Loch Ness Monster – often spotted, but never confirmed."  Reform commissions come and go with nearly every presidential administration, and the current one is no exception.

The National Commission on Fiscal Responsibility and Reform has released its much-anticipated report proposing reforms intended to closing the yawning federal budget deficit.  The report, titled "The Moment of Truth," a copy of which is available here, makes a variety of proposals, including a number of reforms to individual and corporate tax provisions.

As our regular readers know, the expiration of a variety of tax provisions has been a topic of interest here at the TaxBlawg.  For readers who are interested in the issue, you may find useful the Tax Foundation's post reminding us of the federal tax provisions that are scheduled to expire at the end of this year as well as provisions that expired at the end of 2009.

Categories: Legislation

It seems that one of our favorite topics is back in the news: the sourcing of guarantee fees.  As reported in today’s Tax Notes, Robert Driscoll, withholding technical advisor for LMSB, was recently quoted as saying that guarantee fees might not be considered U.S.-source income if the guarantor is a qualified resident of a treaty country.  Amy S. Elliott, “Guarantee Fees May Not Be U.S.-Source if Guarantor Resides in Treaty Country, Official Says,” 2010 TNT 215-4 (Nov. 8, 2010).  According to the article, discussions within the IRS National Office have suggested that guarantee fees would probably fall under the “other income” article of the relevant treaty and thus would not be considered U.S.-source income in most cases.  Id.

As we’ve discussed previously at the TaxBlawg, a minor provision of the Patient Protection and Affordable Care Act – Section 9006, which dramatically expands the requirements for reporting payments on Form 1099 – has become a hot-button issue in Congress.  Prior to the law, Form 1099 reporting was not required for payments for goods or (with some exceptions) payments to corporations.  Section 9006 expanded the Form 1099 requirement to cover such payments made to a single payee if the payments exceed an aggregate of $600 or more during a calendar year.

Over the summer, the small business lobby called foul, arguing that the expansion imposed an oppressive paperwork burden on small businesses.  Consequently, earlier this week, Senate Democrats and Republicans proposed dueling amendments to the Small Business Jobs Act of 2010 to “fix” the expanded Form 1099 reporting requirement of Section 9006.  In the eternal spirit of politics, each party’s amendment failed because neither wanted to give the other credit for being the savior of small businesses.  Despite the failure of these amendments to Section 9006, the Senate passed the bill this afternoon, foreshadowing its likely enactment in the near future.

Categories: Legislation