Requirement to Change to ADS for Depreciation When Electing out of Section 163(j): A Change in Use, Not a Change in Accounting Method
On December 21, 2018, the IRS released Revenue Procedure (“Rev. Proc.”) 2019-8, which provides guidance to real property trades or businesses and farming businesses that have the ability to elect out of Section 163(j) interest limitations, without the requirement to file an accounting method change when changing to the alternative depreciation system (“ADS”) as required. This new guidance is extremely taxpayer friendly as it applies to applicable property placed in service before the election year, during the election year, and in subsequent taxable years. The TCJA limits the business interest deduction for taxpayers with more than $25 million in average annual gross receipts. Read More.
TCJA’s Excise Tax: Remuneration in Excess of $1,000,000 and Excess Parachute Payments
The Tax Cut and Jobs Act (“TCJA”) imposes a 21 percent excise tax on certain compensation paid to covered employees of certain tax exempt and governmental employers, effective the first tax year beginning after December 31, 2017. The Internal Revenue Service (“IRS”) has now issued interim guidance in IRS Notice 2019-09, to help you comply with these rules. Until further guidance is issued, you can rely on a good faith, reasonable interpretation of the statute. The interim guidance can be used as an interpretation, or other approaches can be used, as long as Notice 2019-09 does not specify that a particular. Read More.
Internal Revenue Service Extends Affordable Care Act Form 1095 Deadline
On November 29, 2018, the Internal Revenue Service (“IRS”) issued Notice 2018-94, which extends the deadline for issuers and Applicable Large Employers to issue Affordable Care Act Forms 1095-B and/or Form 1095-C to individuals from January 31, 2019, to March 4, 2019. The IRS will not impose filing or issuance penalties when a “good faith effort” has been made to issue and file the statements in regards to time and accuracy. Taxpayers can file their 2018 return prior to receipt of either form to confirm satisfaction of the individual Minimum Essential Coverage requirement. Read the recent publication from Cherry Bekaert Benefits Consulting for more information and a full list. Read More.
Internal Revenue Service Confirms Tax Filing Season to Begin January 28
Despite the government shutdown, the Internal Revenue Service (“IRS”) confirmed that it will process 2018 tax returns beginning January 28, 2019, and provide refunds as scheduled. Congress directed the payment of all tax refunds through a permanent, indefinite appropriation and the IRS has consistently been of the view that it has authority to pay refunds despite a lapse in annual appropriations. Although in 2011 the Office of Management and Budget (“OMB”) directed the IRS not to pay refunds during a lapse, OMB has reviewed the relevant law at Treasury’s request and concluded that IRS may pay tax refunds during a lapse. The. Read More.
IRS Issues Guidance Regarding Parking Fringe Benefits
Although many tax-exempt organizations and not-for-profits (“NFPs”) with fiscal year ends may have filed their first returns to report unrelated business taxable income for parking (“Parking UBTI”) from qualified transportation fringe benefits provided to employees, the IRS has issued some helpful guidance in Notice 2018-99. Additionally, Notice 2018-100 provides that NFPs will not be subject to a penalty for failure to make timely estimated payments related to Parking UBTI if certain conditions are met. Four-Step Process Provided For Organizations Owning or Leasing Parking Facility Until further guidance is issued, NFPs may calculate Parking UBTI using any “reasonable method.” However, the. Read More.
Proposed Regulations Give Pass-Through Owners Additional Time to Defer Recognition of Gains by Investing in a Qualified Opportunity Fund
As part of the Tax Cuts and Jobs Act (“TCJA”) signed into law on December 22, 2017, new tax incentives were created under Section 1400Z-2 of the Internal Revenue Code (“IRC”) that allow you to elect to defer certain gains until as late as December 31, 2026, to the extent that those gains are reinvested in a Qualified Opportunity Fund (“QOF”) within 180 days. On October 19, 2018, the Treasury Department issued proposed regulations explaining the operation of the rules, and providing some much needed guidance and clarity. These regulations provide flexibility to owners of pass-through entities that receive an allocable share. Read More.
IRS Finalizes Negative Section 263A Regulations
The IRS issued final regulations (T.D. 9843) that, under Section 263A, amend the Uniform Capitalization (“UNICAP”) rules for taxpayers. In addition, the IRS simultaneously released Rev. Proc. 2018-56, which updates the automatic accounting method change procedures to assist taxpayers in complying with the final regulations. These final regulations are effective for taxable years beginning on or after November 20, 2018. The following are key takeaways from the final regulations and automatic accounting method change procedures. The new regulations: Created a new Modified Simplified Production Method (“MSPM”) for calculating additional Section 263A costs. Clarified how certain inventory costs are calculated and. Read More.