text:
Howard Y. Ikeda
Charlene Y. Wong
David M. Horiuchi
Christine T. Saito
Dennis K.M. Lau
Jon S. Yoshimoto
Kimberly R. Ikeda
Dale A. Abe
Portal End User License Agreement
Tax Briefing(s)
2018 Year-End Tax PlanningTax Reform 2.02018 Post-Filing Season UpdateCongress Approves Sweeping Tax Overhaul
2019 Luxury Auto Depreciation Caps and Lease Inclusion Amounts Issued
The IRS has issued the luxury car depreciation limits for business vehicles placed in service in 2019, and the lease inclusion amounts for business vehicles first leased in 2019.Luxury Passenger Car D...
2020 Inflation Adjustments for HSAs Released
The IRS has released the 2020 inflation-adjusted amounts for health savings accounts (HSAs) under Code Sec. 223. For calendar year 2020, the annual limitation on deductions under Code Sec. 2...
IRS Unveils New Draft 2020 Form W-4
The IRS on May 31 unveiled a new preliminary draft of the 2020 Form W-4, Employee's Withholding Allowance Certificate. Although an earlier version of the Form W-4 had been released last June, Tr...
IRS Discontinues Certain Faxing and Third-Party Mailing Service
The IRS will be ceasing its tax transcript faxing service, and will also amend the Form 4506, Request for Copy or Transcript of Tax Form, series to end third-party mailing of tax returns and transcrip...
New Actuarial Tables Delayed, IRS Tells Wolters Kluwer
The new actuarial tables are delayed, the IRS told Wolters Kluwer on May 30. "We are currently working on new actuarial tables, but we cannot predict when they will be published."Generally, the I...
IRS Updates 2018 Schedule D Instructions to Correct Worksheet Error
The IRS posted updated instructions for 2018 Schedule D (Form 1040), Capital Gains and Losses, that include a corrected worksheet. The revised worksheet corrects a rate error that may have calculated ...
IRS Finalizes Rules Increasing Enrolled Agent Application and Renewal Fees
The IRS has finalized regulations that increase both the enrollment and renewal user fee for enrolled agents from $30 to $67. The rules also increase the renewal user fee for enrolled retirement plan ...
Indian Tribal Casino Distributions Taxable to Members
A married couple had unreported taxable income in the form of distributions received from casino revenue. However, the IRS did not obtain written supervisory approval before the first formal communica...
IRS Allowed to Treat Partnership as Aggregate of its Partners
The IRS was allowed to assert its authority under the abuse of entity rule of Reg. §1.701-2(e) to treat a partnership as an aggregate of its partners. Treating the partnership as an agg...
IRS Issues Nonconventional Source Fuel Reference Price for 2018
The IRS has published the reference price under Code Sec. 45K(d)(2)(C). The credit period for the nonconventional source production credit under Code Sec. 45K ended on December 31, 2013...
Comments Sought on Carbon Oxide Sequestration Credit
The Treasury Department and the IRS have requested general comments on issues arising from the Bipartisan Budget Act of 2018 (BBA) ( P.L. 115-123) amendments to the Code Sec. 45Q credit...
IRS Clarifies Treatment of Refunds with New SALT Limits
The IRS has provided four examples of the interaction of the new limit on the deduction on state and local taxes (SALT) under Code Sec. 164(b)(6) with the tax benefit rule for refunds under&...
Plug-In Electric Vehicle Credit to Phase Out for GM Vehicles
The tax credit for new qualified plug-in electric drive motor vehicles sold by General Motors, LLC, will begin to phase out April 1, 2019. The credit begins to phase out in the second calendar quarter...
2019 Foreign Housing Expense Limitations Released
The IRS has provided the adjustments to the limitation on foreign housing expenses for specific locations for tax year 2019. Generally, a qualified individual whose entire tax year is within the appli...
2018 Waivers of 911 Eligibility Requirements Due to Adverse Conditions
The IRS has provided a waiver for any individual who, for the 2018 tax year, failed to meet the eligibility requirements of Code Sec. 911(d)(1) due to war, civil unrest, or similar adverse c...
IRS Revises EIN Application Process
As part of its ongoing security review, the IRS is revising the application process for obtaining an employer identification number (EIN). Starting May 13, 2019, only individuals with social security ...
IRS Issues 2018 Nonconventional Source Fuel Reference Price
The IRS has published the nonconventional source fuel reference price for calendar year 2018. The credit period for the nonconventional source production credit under Code Sec. 45K ended on ...
HI - Market-based sourcing adopted for income from intangibles and services
Hawaii has adopted market-based sourcing for apportioning corporate income from intangibles and services. The changes apply to tax years beginning after 2019.This replaces the existing cost of perform...
The Senate has approved a bipartisan IRS reform bill, which now heads to President Trump's desk. Trump is expected to sign the bill into law.
The reworked Taxpayer First Act ( HR 3151) cleared the Senate on the evening of June 13. The revamped measure had been approved unanimously in the House on June 10.
"After years of good-faith, bipartisan work, our IRS reforms are finally going to become law," House Ways and Means Committee Chairman Richard Neal, D-Mass., and ranking member Kevin Brady, R-Tex., said in a joint statement. "In this historic legislation, we focused on putting taxpayers first."
Likewise, Senate Finance Committee (SFC) Chairman Chuck Grassley, R-Iowa, praised the passage of the bipartisan, bicameral IRS reform bill. "It's a big first step toward strengthening taxpayer protections and turning the IRS into the customer service organization it ought to be," Grassley said in a statement. "I look forward to President Trump signing it into law so the IRS can begin implementing long overdue reforms that will put taxpayers first," he added.
Reworked Bill
The reworked IRS reform bill, originally introduced in the last Congress, was revised earlier in June after the House passed a prior version in April. However, the original House-approved Taxpayer First bill (HR 1957) was deemed doomed in the Senate by May because of recent controversy surrounding the IRS's Free File program. Thus, the provision codifying the Free File program was stripped from the original bill; the measure was reintroduced as HR 3151. It then quickly cleared each chamber.
Service Improvements
Generally, the Taxpayer First Act aims to reform the IRS for the first time in 20 years to better meet the needs of taxpayers. It requires the IRS to develop a comprehensive customer service strategy, as well as a plan to redesign its structure, modernize its technology, and enhance its cyber security. In addition, the new law will:
waive the application fee for an offer in compromise (OIC) by a low-income taxpayer;
clarify information available about low-income taxpayer clinics (LITCs);
codify the Volunteer Income Tax Assistance (VITA) Program;
require notice regarding the closure of taxpayer assistance centers (TACs);
improve the IRS whistleblower program; and
modify the private debt collection program.
The legislation includes a number of provisions to help protect taxpayers from tax ID theft and improve taxpayer interaction with the IRS should they become a victim. For example, the IRS must provide a single point of contact for victims of identity theft, notification of suspected identity theft, and guidelines for stolen identity refund fraud cases.
The IRS is required to expand its current program that allows victims of tax ID theft to obtain a personalized PIN. Any individual must be allowed to request an identity protection personal identification number (IP PIN) to confirm a taxpayer's identity on tax returns.
The IRS reform bill directly impacts taxpayers and other persons by reducing the threshold for filing electronically from 250 or more returns during the year. The threshold is 100 or more returns for 2021, and 10 or more return after 2021. The IRS can waive the e-file requirement for tax return preparers in areas with limited internet access.
The e-filing threshold for a partnership with 100 or fewer partners remains unchanged before 2022. The threshold is 150 returns for 2019, 100 returns for 2020, and 50 returns for 2021.
E-filing requirements are also extended to all tax-exempt organizations that file returns or statements, regardless of amount of assets, gross receipts, or number of returns to be filed. In addition, the IRS is directed to develop an internet portal to allow taxpayers to file series Form 1099, similar to the portal used to file series Form W-2 with the Social Security Administration.
Other Electronic Services
To help increase the use of electronic services, the IRS must publish within six months uniform standards for accepting electronic signatures on requests for disclosure of taxpayer information (Forms 2848, 4506-T, and 8821). It must also limit the redisclosure of return information by a designee to only those expressly consented to by the taxpayer.
The new law increases the penalty for improper disclosure or use of information by return preparers. It also puts new limits on access to returns and return information by non-IRS employees.
Overall, the IRS must develop procedures to authenticate users of its suite of electronic services, to prevent tax refund fraud. Included in these services, the IRS must develop an automated version of its Income Verification Express Service (IVES) for third-parties.
Planning Note: The legislation also allows the IRS to accept credit and debit card payments for the payment of taxes directly, as opposed to through a third party. In addition, the IRS must establish procedures for taxpayers to report misdirected deposits of refunds.
Additional changes made by the Taxpayer First Act include:
clarifying procedures for equitable relief from joint liability;
establish new safeguards on the seizure of funds believed to be structured to avoid the $10,000 financial reporting requirement; and
modify procedures for the issuance of summons and notice of third party contacts by the IRS.
To help pay for these changes, the minimum penalty for failure to file returns is increased after 2019 to the lesser of $330 (indexed for inflation) or 100 percent of the amount required to be shown on the return.
Taxpayers may rely on two new pieces of IRS guidance for applying the Code Sec. 199A deduction to cooperatives and their patrons:
Proposed regulations provide detailed rules for coop patrons and specified cooperatives to calculate the deduction.
A proposed revenue procedure provides three methods for specified cooperatives to calculate W-2 wages.
199A Deduction for Cooperatives and Patrons
The 199A deduction, also known as the pass-through deduction or the QBI deduction, generally allows individuals, estates and trusts to deduct up to 20 percent of their qualified business income (QBI) from sole proprietorships and pass-through entities. Since most coops are C corporations, they cannot claim the deduction. However, their members may receive patronage dividends that are included in QBI.
Despite these general rules, certain agricultural or horticultural coops, known as "specified cooperatives," can claim their own version of the a deduction under Code Sec. 199A(g). A specified coop can also pass through any portion of this deduction by making qualified payments to its patrons. The patrons must reduce their own QBI accordingly.
For specified coops, the 199A(g) deduction retains many of the rules that governed the Code Sec. 199 domestic production activities deduction before it was repealed at the end of 2017. For example, the 199A(g) deduction is based on the specified coop's domestic production gross receipts (DPGR) and qualified production activities income (QPAI), rather than its QBI.
Sec. 199A Deduction for Coop Patrons in General
Under the proposed regulations, any coop patron's QBI may include patronage dividends and an exempt coop's non-patronage dividends that:
are related to the patron's trade or business,
are qualified items of income, gain, deduction or loss at the coop level,
are not from a specified service trade or business (SSTB), and
are properly reported to the patron.
The proposed regulations provide detailed rules for how coops must report the required information to their patrons. However, the coop does not report any W-2 wages or unadjusted basis in qualified property immediately after acquisition (UBIA). The W-2/UBIA limit that can reduce QBI for higher-income taxpayers is calculated only at the patron level.
Sec. 199A(g) Deduction for Specified Cooperatives
Code Sec. 199A(g) allows specified coops to claim a 199A deduction and pass through any portion of it by making qualified payments to its members. However, as mentioned above, a specified coop's deduction is largely based on the pre-2018 domestic production activities deduction (DPAD). This means that the 199A(g) deduction for specified coops is effectively separate from the general Code Sec. 199A(a) deduction for other taxpayers.
Since specified coop patrons might be able to claim both the general 199A(a) deduction and the passed-through portion of the coop's 199A(a) deduction, they must reduce their 199A(a)deduction by nine percent of QBI (or if less, 50 percent of W-2 wages) that is allocable to the qualified payments from the specified coop.
The proposed regulations offer a safe harbor that patrons can use to calculate this reduction. The patron allocates aggregate business expenses and W-2 wages between qualified payments and other gross receipts by ratably apportioning them based on the ratio of qualified payments to total gross receipts in QBI.
The proposed regulations also define several terms that are relevant to the 199A(g) deduction for specified coops, including:
Patron,
Specified cooperative,
Agricultural or horticultural products (though the IRS is also considering broader definitions), and
In whole or significant part.
Sec. 199A(g) Deduction and DPAD
The proposed regulations also provide four steps to determine the amount of a specified coop's 199A(g) deduction. A specified coop that is not tax-exempt must:
separate patronage and non-patronage gross receipts and related deductions;
identify patronage gross receipts that qualify as DPGR,
use the patronage DPGR from step (3) to calculate QPAI, and
calculate the 199A(g) deduction, which is generally nine percent of the lesser of QPAI from step (4), or taxable income
These last three steps are virtually identical to the pre-2018 DPAD rules.
A tax-exempt specified coop calculates two separate 199A(g) deductions: one based on gross receipts and related deductions from patronage sources, and one based on those items from non-patronage sources.
The proposed regulations also apply DPAD-types rules to:
determine the coop's DPGR,
reduce a specified coop's 199A(g) deduction to reflect oil-related QPAI, and
pass through the deduction to patrons.
In addition, the proposed regulations provide special rules for partnerships and expanded affiliated groups (EAGs).
Specified Coops and W-2 Wages
Although the proposed regulations treat the 199A(g) deduction as largely independent from the general 199A(a) deduction, both deductions generally use the same rules for W-2 wages. However, under the proposed regulations, W-2 wages for the 199A(g) deduction cannot include wages paid with respect to employment in Puerto Rico.
As mentioned above, a wages/UBIA limit may reduce the 199A deduction for higher-income taxpayers. A proposed revenue procedure provides three methods for calculating W-2 wages for purposes of the 199A(g) deduction:
unmodified Box method
modified Box 1 method
tracking wages method.
These methods are largely identical to the methods provided in Rev. Proc. 2019-11, but are intended to better reflect changes that may be made in the underlying Form W-2, Wage and Tax Statement.
Effective Dates for 199A Proposed Regulations and Revenue Procedure
The regulations are proposed to apply to tax years beginning after the date they are published as final. However, taxpayers may apply them in their entirely before that date.
The notice of the proposed revenue procedure is effective on June 18, 2019. Specified cooperatives may rely on the proposed procedure before it is published in its final form.
IRS Invites Comments on Proposed Rules for Sec. 199A
The IRS requests comments on the proposed regulations and the proposed revenue procedure. In particular, the IRS invites comments on the following elements:
A coop's reporting of W-2 wages and UBIA,
The safe harbor for coop patrons,
Definitions,
A specified coop's separation of patronage and non-patronage income,
DPGR treatment of minor assembly and contract work, and
W-2 wages and Puerto Rico.
Comments are due by August 19, 2019. They may be mailed or hand-delivered to the IRS, or submitted electronically via the Federal eRulemaking Portal at www.regulations.gov. Comments on the proposed regs should reference "IRS REG-118425-18" and comments on the proposed revenue procedure should reference "Notice 2019-27".
The IRS has issued final regulations that require taxpayers to reduce the amount any charitable contribution deduction by the amount of any state and local tax (SALT) credit they receive or expect to receive in return. The rules are aimed at preventing taxpayers from getting around the SALT deduction limits. A safe harbor has also been provided to certain individuals to treat any disallowed charitable contribution deduction under this rule as a deductible payment of taxes under Code Sec. 164. The final regulations and the safe harbor apply to charitable contribution payments made after August 27, 2018.
SALT Limit
An individual's itemized deduction of SALT taxes is limited to $10,000 ($5,000 if married filing separately) for tax years beginning after 2017. Some states and local governments have adopted laws that allowed individuals to receive a state tax credit for contributions to certain charitable funds. These laws are aimed at getting around the SALT deduction limit by creating a charitable deduction for federal income tax purposes. Regardless of state and local law, however, federal law controls when determining charitable deductions for federal income tax purposes.
Return Benefit
The final regulations generally adopt the rule in proposal regulations ( NPRM REG-112176-18) that the receipt of a SALT credit for a charitable contribution is the receipt of a return benefit (quid pro quo benefit). If a taxpayer makes a payment or transfers property to Code Sec. 170(c) entity, he or she must reduce any charitable contribution deduction for federal income tax purposes if he or she receives or expects to receive a SALT credit in return. A taxpayer is generally is not required to reduce the charitable deduction on account of its receipt of state or local tax deductions. However, the taxpayer must reduce its charitable deduction if it receives or expects to receive state or local tax deductions in excess of the taxpayer's payment or the fair market value of property transferred.
De Minimis Exception
The final regulations retain the de minimis exception that a taxpayer's charitable deduction is not reduced if the SALT credits received as a return benefit do not exceed 15 percent of the taxpayer's charitable payment. The 15-percent exception applies only if the sum of the taxpayer SALT credit received or excepted to receive does not exceed 15 percent of the taxpayer's payment or of the fair market value of the property transferred.
The IRS has also issued Notice 2019-12 providing a safe harbor for certain individuals if any portion of a charitable contribution deduction disallowed due to the receipt of a SALT credit. Under the safe harbor, any disallowed portion of the charitable deduction may be treated as the payment of SALT taxes for the purposes of deducting taxes under Code Sec. 164.
Eligible taxpayers can use the safe harbor to determine their SALT deduction on their tax-year 2018 return. Those who have already filed may be able to claim a greater SALT deduction by filing an amended return if they have not already claimed the $10,000 maximum amount ($5,000 if married filing separately).
Final regulations address the global intangible low-taxed income (GILTI) provisions of Code Sec. 951A. The final regulations retain the basic approach and structure of the proposed regulations published on October 10, 2018. The final regulations address open questions and comments received on the proposed regulations.
Final regulations on the foreign tax credit also adopt proposed regulations published December 7, 2018. These rules were issued to ensure that the applicability dates coincide with the applicability dates of the Code sections to which they relate. The final foreign tax credit regulations also retain the basic structure and approach of the proposed regulations.
Also, a number of provisions were substantially revised.
The final regulations treat a domestic partnership as an entity for purposes of determining whether a U.S. person is a U.S. shareholder and whether a foreign corporation is a controlled foreign corporation (CFC). But the final rules treat a domestic partnership as an aggregate for purposes of determining whether and to what extent a partner of a domestic partnership has a GILTI inclusion.
Transfers During Qualified Period
The final regulations allow taxpayers to make an election that eliminates disqualified basis in property, by reducing a commensurate amount of adjusted basis in the property for all purposes of the Code.
Specified Tangible Property
A CFC may elect to use its non-ADS depreciation method for property acquired before enactment of the GILTI rules. A special rule requires depreciation of the salvage value: the portion of the basis in the property that would not be fully depreciated under the non-ADS depreciation method.
Anti-Abuse Rule
Under a "per se" rule in the proposed regulations, property was deemed to be held for the principal purpose of reducing a GILTI inclusion if held by the CFC for less than a 12-month period. The final regulations convert the per se rule to a rebuttable presumption. Under a second presumption, property held for more than 36 months is not subject to the rule. A safe harbor applies for certain transfers.
Foreign Tax Credit
The foreign tax credit proposed regulations contained a rule for determining the adjusted basis of the stock of the foreign corporation for purposes of allocating expenses to stock of certain foreign corporations. The final regulations provide that a taxpayer should not have an adjusted basis below zero in stock of a foreign corporation. A taxpayer's adjusted basis may be reduced below zero as a result of an adjustment for earnings and profits deficits, as long as the adjustment for earnings and profits increased the adjusted basis of the foreign corporation above zero.
Applicability of Final Regs
The final GILTI regulations generally apply to tax years of foreign corporations beginning after December 31, 2017, and to tax years of U.S. shareholders in which or with which such tax years of foreign corporations end.
The Treasury Department and the IRS also issued proposed regulations on the treatment of domestic partnerships for determining amounts included in their partners' gross incomes under Code Sec. 951 with respect to CFCs owned by the partnership, and the GILTI treatment of gross income that is subject to a high rate of foreign tax under Code Sec. 951A.
The proposed regulations would affect U.S. persons that own stock of foreign corporations through domestic partnerships and U.S. shareholders of foreign corporations. The Treasury Department and the IRS request timely comments on all aspects of the proposed rules. A public hearing will be scheduled if requested in writing by any person that timely submits written comments.
Aggregate Treatment Adopted
To be consistent with the treatment of domestic partnerships under Code Sec. 951A, Treasury and the IRS determined that a domestic partnership should also generally be treated as an aggregate of its partners in determining stock owned under Code Sec. 958(a) for Code Sec. 951 purposes.
Expansion to Exclude Other High-Taxed Income
Treasury and the IRS also determined that the GILTI high tax exclusion should be expanded (on an elective basis) to include certain high-taxed income even if that income would not otherwise be foreign base company income (FBCI) or insurance income. Further, taxpayers should be allowed to elect to apply the Code Sec. 954(b)(4) exception (the "GILTI high tax exclusion") for certain classes of income that are subject to high foreign taxes.
Newly issued temporary regulations limit the application of the Code Sec. 245A participation dividends received deduction (the participation DRD) and the Code Sec. 954(c)(6) exception in certain situations that present an opportunity for tax avoidance. The temporary regulations also provide related information reporting rules under Code Sec. 6038.
Participation Exemption Regime
The transition to the participation exemption system introduced by the Tax Cuts and Jobs Act, P.L. 115-97 (the Act) is effected through several interlocking provisions – Code Secs. 245A, 951A, and 965. All three provisions have different effective dates so there are periods in which some but not all of them apply. The participation exemption system operates alongside the subpart F regime.
Code Sec. 245A generally allows a domestic corporation a 100-percent dividends received deduction (a participation DRD) for the foreign-source portion of a dividend received after December 31, 2017, from a specified 10 percent-owned foreign corporation (an SFC). Generally, only earnings that are not taxed under the subpart F or the global intangible low-taxed income (GILTI) regime can, upon distribution, give rise to a dividend eligible for the participation DRD. Distribution of earnings and profits that is taxed under the subpart F or GILTI regime is a distribution of previously taxed earnings and profits (PTEP) that is not treated as a dividend and cannot qualify for the participation DRD. The participation DRD applies to distributions made after December 31, 2017.
The participation DRD does not apply to untaxed earnings of U.S. shareholders as of December 31, 2017. Instead, such earnings are subject to a transition tax under Code Sec. 965. For fiscal year CFCs, there is a gap period during which certain of their earnings may escape taxation.
Code Sec. 951A (the GILTI regime) taxes a U.S. shareholder on its global intangible low-taxed income, or GILTI, with respect to its CFCs at a reduced rate. The GILTI regime applies in the first tax year of a CFC beginning after December 31, 2017.
Code Sec. 954 generally provides that a dividend received by a CFC is included in the CFC's foreign personal holding company income (FPHCI). Under Code Sec. 954(c)(6), however, a dividend received by a CFC from a related CFC is not included in the CFC's FPHCI if certain requirements are satisfied (the section 954(c)(6) exception).
Scope of the Temporary Regulations
The temporary regulations limit the availability of the participation DRD and the section 954(c)(6) exception in specific and narrow cases where the deduction or exception, respectively, effectively eliminates subpart F income or GILTI from the U.S. tax system. Specifically, the temporary regulations address transactions that have the effect of avoiding tax under Code Sec. 965, 951A, or 951by inappropriately converting income that should have been subject to U.S. tax into nontaxed income. The temporary regulations also include information reporting rules under Code Sec. 6038 to facilitate administration of certain rules in the temporary regulations. The temporary regulations do not include general rules relating to dividends eligible for the participation DRD since those rules will be included in separate guidance.
Overview of the Temporary Regulations
Code Secs. 245A, 951A, and 965 generally act to tax foreign source income equivalently across taxpayers and sources so long as a U.S. shareholder owns the same amount of stock of a calendar year CFC throughout the CFC's entire tax year. However, deviations from this condition potentially allow taxpayers to avoid tax by claiming a participation DRD in situations where otherwise identical income would be subject to U.S. tax. The following two situations may present such an opportunity for tax avoidance: (1) a U.S. corporation is the shareholder of a fiscal year CFC during 2018, or (2) a CFC pays a dividend and experiences a direct or indirect change in ownership during a tax year. The temporary regulations limit the application of the participation DRD in these situations.
With respect to the first situation, described above, as a result of a gap in the effective dates of these related international tax provisions, the difference between calendar year and fiscal year CFCs is significant and presents the potential for substantial tax avoidance when utilized to artificially generate earnings and profits in non-ordinary course transactions between related parties.
The temporary regulations refer to the portion of a dividend attributable to earnings and profits arising from such a transaction during this period as an "extraordinary disposition amount." An extraordinary disposition amount consists of certain earnings and profits resulting from transactions between related parties during the disqualified period. Although the period during which extraordinary dispositions may have occurred has passed, the regulations will potentially apply to any distributions of the associated earnings and profits after 2017.
In the second situation, described above, the participation DRD could facilitate the avoidance of the subpart F and GILTI regimes by allowing a U.S. shareholder to transfer, before the end of a CFC's tax year, stock of the CFC to a new shareholder who will not be taxed on the CFC's subpart F income or tested income.
The earnings and profits representing the portion of a dividend of a CFC attributable to subpart F income or tested income that, absent a transfer of the CFC stock pursuant to an extraordinary reduction, would have been subject to the subpart F or GILTI regimes are referred to as an "extraordinary reduction amount" in the temporary regulations. An extraordinary reduction amount consists of certain earnings and profits generated during a CFC's tax year beginning after 2017 in which a domestic corporate U.S. shareholder reduces its ownership of the CFC by certain threshold amounts (e.g., a decrease in ownership of more than 10 percent). For this purpose, "certain earnings and profits" refers to income generally subject to inclusion under the subpart F or GILTI regimes.
Results similar to the ones described in the context of extraordinary disposition amounts and extraordinary reduction amounts can be achieved using the exemption from subpart F income under Code Sec. 954(c)(6) and lower-tier CFC dividends to upper-tier CFCs. Thus, the temporary regulations limit the application of the section 954(c)(6) exception in order to prevent similar results in circumstances in which a lower-tier CFC pays a dividend to another CFC, instead of directly to a U.S. shareholder.
Operation of the Temporary Rules
The temporary regulations do not permit the participation DRD for the portions of dividends made by CFCs that are attributable to ineligible amounts, which comprise extraordinary reduction amounts and 50 percent of any extraordinary disposition amounts.
To accomplish this, the temporary regulations disallow a deduction for transactions that have the effect of avoiding tax under Code Sec. 965, 951A, or 951. The extraordinary disposition rules accomplish this by denying the participation DRD for a narrowly and objectively defined class of earnings and profits generated by transactions undertaken in the disqualified period in circumstances that raise abuse concerns.
The extraordinary reduction rules accomplish this by denying the participation DRD for certain earnings distributed in the same year as reductions in ownership of CFC stock by a controlling Code Sec. 245A shareholder. The temporary regulations contain similar rules with respect to the section 954(c)(6) exception.
Information Reporting under Code Sec. 6038
Ineligible amounts, tiered extraordinary disposition amounts, and tiered extraordinary reduction amounts must be reported on the appropriate information reporting form in accordance with Code Sec. 6038. A transition rule mandates that taxpayers report the required information on the first return filed following the issuance of revised forms, instructions, or other guidance with respect to reporting such information. The transition rule also requires a corporation to report the information with respect to a predecessor corporation.
Applicability Dates
The rules in the temporary regulations relating to eligibility of distributions for the participation DRD apply to distributions occurring after December 31, 2017. The rules in the temporary regulations relating to the eligibility of dividends for the section 954(c)(6) exception also apply to distributions occurring after December 31, 2017, subject to a transition rule.
Final regulations reduce the Code Sec. 956 amount for certain domestic corporations that own stock in controlled foreign corporations (CFCs). The regulations are intended to ensure that Code Sec. 956 is applied consistently with the participation exemption system under Code Sec. 245A.
Subpart F Rules
Under the subpart F rules, U.S. shareholders of a CFC are currently taxed on their pro rata shares of the CFC's subpart F income without regard to whether the income is distributed to the shareholders ( Code Sec. 951(a)). Subpart F income generally includes passive income and other income that is readily movable from one taxing jurisdiction to another ( Code Sec. 952). A U.S. shareholder is a U.S. person (e.g., individual citizen, domestic corporation, etc.) that owns or is treated as owning 10 percent or more of the voting power or value of a foreign corporation ( Code Sec. 951(b)).
The U.S. shareholders of a CFC are taxed on their pro rata share of the CFC's earnings that are invested in U.S. property during the tax year and not distributed or otherwise taxed (the "section 956 amount"). U.S. shareholders are effectively taxed on foreign source earnings brought back into the United States, on the theory that the returned earnings are substantially the same as a dividend. This rule is intended to create symmetry by taxing effective repatriations of earnings in the same manner as actual repatriations of earnings are taxed.
Participation DRD
The Tax Cuts and Jobs Act (TCJA) ( P.L. 115-97) added Code Sec. 245A, which allows a 100-percent participation exemption deduction—a participation dividends-received deduction (DRD)—for the foreign-source portion of dividends received from a specified 10-percent owned foreign corporation by a domestic corporation that is a U.S. shareholder of the foreign corporation. A specified 10-percent owned foreign corporation is any foreign corporation (other than certain passive foreign investment companies) in which a domestic corporation is a U.S. shareholder.
However, a domestic corporation cannot claim a participation DRD for a dividend on any share of the foreign corporation's stock:
that the domestic corporation holds for 365 days or less during the 731-day period that begins on the date that is 365 days before the date when the share becomes ex-dividend with respect to the dividend; or
to the extent the domestic corporation is obligated to make related payments on positions in substantially similar or related property ( Code Sec. 246(c)).
Under the TCJA, a Code Sec. 956 inclusion is not eligible for the DRD because it is not a dividend.
Tax Treatment Symmetry
The participation exemption system has made the current broad application of Code Sec. 956 to corporate U.S. shareholders inconsistent with the Code section's purposes and the scope of the transactions it is meant to address. In response, the regulations:
exclude corporate U.S. shareholders from the application of Code Sec. 956 to the extent necessary to maintain symmetry between the taxation of actual repatriations and the taxation of effective repatriations, so that neither an actual dividend to a corporate U.S. shareholder nor the shareholder's Code Sec. 956 amount will result in additional U.S. tax; and
reduce the Code Sec. 956 amount otherwise determined regarding a U.S. shareholder for a CFC's tax year ( "tentative Section 956 amount") to the extent that the shareholder would be allowed a participation DRD had the shareholder received a distribution from the CFC equal to the tentative Code Sec. 956 amount (the "hypothetical distribution").
The regulations include an ordering rule to address the previously taxed earnings and profits (PTEP) rules in Code Sec. 959. Under the ordering rule, the hypothetical distribution is treated as:
first attributable to earnings and profits (E&P) described in Code Sec. 959(c)(2) (amounts attributable to subpart F inclusions); and
then attributable to E&P described in Code Sec. 959(c)(3) (all other E&P).
The regulations also address the tentative section 956 amount with respect to domestic partnerships. The regulations provide that the tentative section 956 amount with respect to a domestic partnership is reduced to the extent that one or more of the domestic corporate partners would be entitled to a participation DRD if:
the partnership received the amount as a distribution; and
the remaining amount of the inclusion under Code Sec. 956 is allocated to the partners in the same proportion as net income would result to partners upon a hypothetical distribution.
Applicability Date
The regulations will apply to tax years of CFCs beginning on or after July 22, 2019, and to tax years of U.S. shareholders in which or with which such tax years of CFCs end.
The regulations may be applied to tax years of CFCs beginning after December 31, 2017, and to tax years of U.S. shareholders in which or with which such tax years of CFCs end, provided the rules are applied consistently by the taxpayer and U.S. related persons.
Final rules allow employers to use health reimbursement arrangements (HRAs) to reimburse employees for the purchase individual insurance coverage, including coverage on an Affordable Care Act Exchange. The rules also allow "excepted benefit HRAs," which would not have to be integrated with any coverage. The rules generally apply for plan years starting on or after January 1, 2020.
HRA Use Expanded
The final rules expand the use of HRAs by:
allowing integration of an HRA with individual health insurance coverage and thereby satisfy the Affordable Care Act's annual dollar limit and preventive care cost sharing requirements;
creating "excepted benefit HRAs" limited in amount and to the types of coverage for which premiums may be reimbursed;
providing new premium tax credit eligibility rules for individuals who are offered an HRA integrated with individual health insurance coverage;
clarifying that individual health insurance coverage, the premiums of which are reimbursed by an HRA or qualified small employer HRA (QSEHRA), does not become part of an ERISA plan when certain conditions are met; and
adding new special enrollment for the individual market for individuals who gain access to HRAs integrated with individual health insurance coverage or who are provided a QSEHRA.
The final regulations add conditions on individual coverage HRAs intended to prevent a negative impact on the individual market.
Integration With Individual Coverage
Almost any employer can satisfy Affordable Care Act reimbursement requirements by having employees buy their own individual coverage. An employers may integrate an HRA with individual health coverage only if:
participants and dependents are actually enrolled in individual health insurance coverage (though not coverage that consists solely of excepted benefits) for each month they are covered by the HRA;
coverage is offered to a class of employees to whom a traditional group health plan is not offered;
coverage is offered on the same terms in amount and conditions to all employees within each class (though certain variations based on age are allowed);
an opt out option is provided for individuals who prefer Affordable Care Act Exchange coverage, but would not be eligible for the premium tax credit if enrolled in an employer health plan such as an HRA; and
substantiation and notice requirements are met.
To guard against adverse selection, the final rules add a minimum class size requirement that will apply to certain classes of employees in certain instances. Classes of employees may include full-time employees; part-time employees; seasonal employees; employees who are included in a unit of employees covered by a collective bargaining agreement in which the plan sponsor participates; employees who have not satisfied a waiting period for coverage; employees who have not attained age 25 prior to the beginning of the plan year; nonresident aliens with no U.S.-based income; employees whose primary site of employment is in the same rating area; and groups combining any of these classes of employee.
Excepted Benefit HRAs
An employer that wants to offer an HRA that is not integrated with non-HRA group coverage, Medicare, TRICARE, or individual health insurance coverage may do so as an excepted benefit. As excepted benefits, these HRAs would not be subject to the employer group plan rules, including the market reforms under the Affordable Care Act. An excepted benefit HRA:
must not be an integral part of the plan;
must provide benefits that are limited in amount ($1,800 per year, adjusted for inflation after 2020);
cannot provide reimbursement for premiums for certain health insurance coverage; and
must be made available under the same terms to all similarly situated individuals.
Final regulations provide requirements that a person must satisfy to become and remain a certified professional employer organization (CPEO), as well as the CPEO's federal employment tax liabilities and other obligations.
CPEOs
Some employers contract with PEOs to complete and file tax returns, pay and withhold employment taxes on wages paid to employees, or provide other employee benefits. Code Sec. 3511 and Code Sec. 7705 provide certification requirements for PEOs, and codify the employment tax consequences of being CPEO.
For federal employment tax purposes, a CPEO is generally treated as the employer of any individual who is:
performing services for a customer of the CPEO; and
covered by a contract between the CPEO and the customer.
Employer treatment applies only to remuneration paid to the covered employee by the CPEO. If an individual covered by a CPEO contract performs services for a customer at a work site that meets certain coverage requirements, only the CPEO is treated as the employer for federal employment tax purposes for remuneration its pays to that work site employee.
A person must apply to the IRS to become a CPEO, and the IRS must certify that the person meets certain requirements. A CPEO must:
meet tax status and background requirements;
meet bond, financial review, and quarterly reporting requirements; and
notify the IRS of any change that materially affects the continuing accuracy of information it has provided to the IRS.
The Treasury Secretary can suspend or revoke CPEO certification if the person does not satisfy certain agreements or applicable requirements.
Final Regs
The final regulations adopt and amend proposed regulations published in 2016 ( NPRM REG-127561-15), and reflect and address certain interim guidance ( Rev. Proc. 2016-33, 2016-25 I.R.B. 1034; Notice 2016-49, 2016-34 I.R.B. 265; Rev. Proc. 2017-14, 2017-3 I.R.B. 426). In finalizing the regulations, the IRS reviewed and analyzed a variety of issues affecting CPEOs, including:
maintaining a separate annual FICA tax and FUTA tax wage base and withholding threshold for each customer for which a covered employee performs services during a calendar year;
the treatment of tax credits, including the addition of the employer credit for paid family and medical leave and certain employee retention credits to the list of specified credits that apply to the CPEO customer and not the CPEO;
the treatment of self-employed individuals under the CPEO rules;
CPEO reporting to the IRS, such as reporting the commencement or termination of CPEO contracts and service agreements;
the meaning of key terms such as "responsible individuals" (certain owners, officers, and other persons of the CPEO), "work site," and "work site employee";
the CPEO application process, including when an applicant may reapply for certification;
CPEO "suitability" requirements, including domestic disregarded entity and sole proprietorship certification, fingerprint cards and background checks, and the waiver of confidentiality and privilege;
working capital requirements, including a limited exception to the positive working capital requirement;
bond requirements, including a provision that the IRS Commissioner may provide exceptions to the rule that a CPEO must meet the bond requirements without posting collateral; and
maintaining employee records.
The final regulations are effective on May 28, 2019.
Senate Tax Writers Discuss Bipartisan Retirement Savings Bills; Related House Vote Expected Soon
Senate tax writers on Capitol Hill continue to discuss bipartisan retirement savings bills as the House gears up for a vote on a related tax measure.
The Senate Finance Committee (SFC) held a May 14 hearing during which lawmakers on both sides of the aisle highlighted the importance of moving forward with retirement savings-related legislative efforts. While a number of related tax proposals have been introduced recently, SFC lawmakers paid particular focus to the bipartisan Retirement Enhancement Savings Bill, more commonly referred to as "RESA."
"[T]his committee worked on a bipartisan basis to put together the [RESA]," SFC ranking member Ron Wyden, D-Ore., said during opening statements. "Our bill is all about making it easier for employers -- particularly small businesses -- to offer retirement plans to their employees," Wyden added. "Giving those small businesses an opportunity to band together and offer a common retirement plan is a simpler and more cost-effective way of helping more people save."
House Vote Expected on Secure Bill
Notably, the Senate's RESA bill has many similarities to the House's Setting Every Community Up for Retirement Enhancement (SECURE) Bill of 2019 (HR 1994). The bipartisan SECURE Bill is expected to reach the House floor for a full chamber vote in the coming days.
"We're on track to go to the House floor this month," Kara Getz, chief tax counsel for House Ways and Means Committee Chairman Richard Neal, DMass., has said. Getz, while speaking on May 10 at the American Bar Association (ABA) May Tax Meeting in Washington, D.C., said that the House bill is derived from a true "partnership" between Democrats and Republicans.
To that end, SFC Chairman Chuck Grassley, R-Iowa, alluded during the May 14 hearing that the Senate and House measures could soon be reconciled and enacted. "I'm hoping that the House will send its version of RESA over to us at some point this month," Grassley said. "And, I'll continue to work closely with Senator Wyden and other Committee members to reconcile the differences and get this important bill to the President."
Additionally, Drew Crouch, senior tax counsel for the SFC minority, while speaking on May 10 at the ABA May Meeting, stated that there is a "high probability" the retirement bill(s) will be enacted this year. Crouch further emphasized this position by adding that that there is a "high chance retirement legislation will make it across the finish line," in this Congress.
Retirement Savings 2.0
Meanwhile, House and Senate lawmakers are already working toward Retirement Savings "2.0," Getz stated at the ABA May Meeting. House tax writers are "actively working on 2.0," Getz said, adding that, "we would really like to markup a second retirement bill."
Likewise, Grassley alluded to the Retirement Savings 2.0 initiative on May 14, noting in his
opening statement that the SFC hearing "marks the start of our work on the next round of retirement savings reforms."
To that end, SFC members Rob Portman, R Ohio, and Ben Cardin, D-Md., on March 14 introduced
a 132-page bipartisan retirement savings tax bill. The Retirement Savings & Security Bill would
make several sweeping reforms to retirement savings.
Trump, Democratic Leaders Agree to Develop $2 Trillion Infrastructure Plan
President Donald Trump and Democratic congressional leaders have agreed to develop a $2 trillion infrastructure plan, according to Senate Minority Leader Chuck Schumer, D-N.Y.
$2 Trillion Infrastructure Plan
"There was goodwill in this meeting…which is a very good thing," Schumer told reporters at the White House on April 30 after meeting with Trump. "We agreed on a number – $2 trillion for infrastructure,"Schumer said. Further, House Speaker Nancy Pelosi, D-Calif., and Schumer both praised Trump after the meeting for his bipartisan cooperation.
The president and Democratic leaders were to meet again to discuss how to pay for the infrastructure plan, Schumer said. At that time, Trump is expected to convey his ideas on funding, Schumer added. "This was a very, very good start…and we hope it will go to a constructive conclusion."
"Pay-Fors"
Additionally, Schumer told reporters at the White House that the infrastructure plan's "pay-fors"remained undetermined. Notably, Schumer suggested from the Senate floor on April 29 rolling back part of Republicans' 2017 tax reform law to fund infrastructure costs.
Generally, infrastructure is considered a bipartisan priority among lawmakers. However, reaching an agreement on how to pay for the reportedly $2 trillion infrastructure plan that is still in development is expected on Capitol Hill to be an arduous task. Namely, Democrats are expected to propose scaling back certain tax cuts under the Tax Cuts and Jobs Act (TCJA) ( P.L. 115-97) to foot the infrastructure bill, which is not likely to receive GOP support.
"That's a non-starter" Senate Majority Leader Mitch McConnell, R-Ky., told reporters at the U.S. Capitol on April 30. "This tax bill [TCJA] is what has generated this robust economy; the last thing we want to do is step on all of this growth…by repealing in effect what has generated all of this prosperity and low unemployment," McConnell said.
White House: Meeting Excellent, Productive
Meanwhile, the White House praised the April 30 infrastructure meeting between Trump and top congressional Democrats, calling it "excellent and productive," as noted in a statement released by White House Press Secretary Sarah Huckabee Sanders shortly after the meeting. Notably, however, the statement did not mention the $2 trillion figure allegedly agreed upon by Trump and Democratic congressional leadership.
"We will have another meeting in three weeks to discuss specific proposals and financing methods,"Sanders added. "The president looks forward to working together in a bipartisan way and getting things done for the American people."
Proposed Regulations Issued on Withholding on Foreign Partner's Disposition of Partnership Interest
Highly anticipated proposed regulations have been issued on the withholding required with respect to the disposition of certain partnership interests. The proposed regulations affect certain foreign persons that recognize gain or loss on the disposition of an interest in a partnership that is engaged in a trade or business in the United States, and persons that acquire those interests. Also affected are partnerships that directly or indirectly have foreign partners.
Gain or loss from the disposition of a partnership interest is treated as income effectively connected to a U.S. trade or business, to the extent that there would have been effectively connected income to the foreign partner, if the partnership assets were sold under Code sec. 864(c)(8). The withholding rules of Code Sec. 1446(f) require 10 percent withholding on the amount realized on the disposition, absent certification that the transferor is not a nonresident alien or foreign corporation.
The proposed regulations are a companion to Proposed Reg. 1.864(c)(8)-1 issued in December 2018, on gain or loss by foreign persons on the disposition of a partnership interest.
Reporting, Withholding and Paying Tax
The proposed regulations provide rules for withholding, reporting and paying tax upon the disposition of a partnership interest in a partnership described in Code Sec. 864(c)(8) and Proposed Reg. 1.864(c)(8)-1. The proposed regulations adopt much of the temporary guidance issued in Notice 2018-29, I.R.B. 2018-16, 495, which looked to the rules for withholding on dispositions of U.S. real property interests by foreign persons in Code Sec. 1445.
The proposed regulations also:
clarify the reporting rules for transfers of partnership interests under Code Sec. 6050(k),
provide rules for implementing withholding by brokers on transfers of certain interests in publicly traded partnerships,
make changes to withholding rules for distributions by publicly traded partnerships,
make changes to reporting rules and procedures for adjusting withholding; and
provide coordination rules to prevent overwithholding.
A transferee is required to report and pay any tax withheld by the 20th day after the date of the transfer. Form 8288, U.S. Withholding Tax Return for Dispositions by Foreign Persons of U.S. Real Property Interests, and Form 8288-A, Statement of Withholding on Dispositions by Foreign Persons of U.S. Real Property Interests.
The proposed regulations also provide rules that address a partnership's requirement to withhold if the transferee fails to withhold.
General Rule and Exceptions
A transferee of a partnership interest must withhold a tax equal to 10 percent of the amount realized on any transfer of a partnership interest (other than certain publicly traded partnership interests), if the gain is treated as effectively connected income.
There are six exceptions to withholding under the proposed regulations:
certification by transferor of non-foreign status,
certification by transferor that no gain is realized on transfer by transferor,
certification by partnership that effectively connected gain from the disposition would be less than 10 percent,
certification by transferor that for prior three tax years its effectively connected taxable income for each year was less than 10 percent of its total distributive share of net partnership income for the year;
certification by transferor that a nonrecognition provision applies, and
certification by transferor that a treaty provision applies.
Publicly Traded Partnership Interests
The proposed regulations provide rules for withholding and reporting on the transfer of an interest in a publicly traded partnership (a PTP interest). The withholding obligation is generally limited to brokers that receive proceeds from the sale and act on behalf of the transferor. Once the proposed regulations are final, the suspension on withholding on a PTP interest in Notice 2018-08, I.R.B. 2018-7, 352, will end.
Notice Requirements
A foreign partner that transfers its partnership interest will need information from the partnership to compute its tax liability based on the deemed sale. Rules are provided that will facilitate the transfer of information between a foreign partner and partnership for purposes of Code Sec. 864(c)(8).
Proposed Regulations Issued on CFC Related Person Rules and Active Trade or Business Exception
Proposed regulations provide rules on the attribution of ownership of stock or other interests for determining whether a person is a related person with respect to a controlled foreign corporation (CFC) under the foreign base company sales income rules.
The proposed regulations also provide rules to determine whether a CFC receives rents in the active conduct of a trade or business, for determining the exception from foreign personal holding company income.
Ownership Attribution
The proposed regulations provide specific rules for applying principles similar to those in the Code Sec. 958(b) constructive ownership rules when determining related person status under the foreign base company sales rules. Determining related person status is relevant for many purposes, including whether certain types of income can be characterized as subpart F foreign base company sales or service income.
A person is a related person with respect to a CFC if the person is:
an individual who controls the CFC;
an entity that controls or is controlled by the CFC; or
an entity that is controlled by the same person that controls the CFC.
Under current Reg. §1.954-1(f), the Code Sec. 318(a)(3) downward attribution rules, which attribute ownership downward from the owner of an entity to an entity, apply by reference to the Code Sec. 958stock ownership rules. These rules are applied regardless of the size of the ownership interest in a partnership, estate or trust, but are applied to corporations based on a 50-percent or more ownership interest.
Based on concern that the downward attribution rules could produce inappropriate results, the proposed regulations provide that the downward attribution rule of Code Sec. 318(a)(3) and Reg. §1.958-2(d) will not apply for purposes of determining related person status under the foreign base company sales income rules.
This change does not preclude a corporation, partnership, trust, or estate from being treated as controlled by the same person or persons that control the CFC under other rules that remain applicable for the related person rules.
Additionally, an anti-abuse rule is provided with respect to the option attribution rule in Code Sec. 318(a)(4). The option attribution rule will not be applied to treat a person with an option as owning the stock or equity interest for purposes of the related person rule if the principal purpose of using the option was to cause a person to be treated as a related person.
The proposed regulations also incorporate a similar rule issued in Notice 2007-9, 2007-1 CB 401. The rule applies if the principal purpose for the use of an option is to qualify dividends, interest, rents or royalties paid by a foreign corporation for the Code Sec. 954(c)(6) CFC look-through exception from foreign personal holding company income. The rule is proposed to apply for tax years of CFCs beginning after December 31, 2006, and ending before the date that final regulation are published in the Federal Register, and for tax year of U.S. shareholders in which or with which such tax years end.
Foreign Personal Holding Company Rules
The proposed regulations modify the foreign personal holding company rules on amounts paid or incurred by a CFC in connection with the CFC's rental income and the active rents exception. Rents are excluded from foreign personal holding company income if they are:
received from a person other than a related person; and
from the active conduct of a trade or business.
If rents are from leasing property as a result of marketing activities, there must be a substantial marketing organization in order to meet the active trade or business test. Under a safe harbor, an organization is substantial if active leasing expenses equal or exceed 25 percent of adjusted leasing profit. If the CFC receives rents from property it does not own, the substantiality of the organization is determined net of those rent payments.
The propose regulations extend the rule to apply to royalties, in addition to rents. As a result, the substantiality of the organization is determined under the safe harbor, net of the rents or royalties paid or incurred by the lessor CFC, for the right to use the property (or a component part of the property) that generated the rental income.
The proposed regulations are generally proposed to apply to tax years of CFCs ending on or after the date the final regulations are published in the Federal Register, and for tax year of U.S. shareholders in which or with which such tax years end.
Final Regulations Issued on Recognition and Deferral of Code Sec. 987 Gain or Loss
Final regulations have been issued on transactions of U.S. taxpayers that have qualified business units (QBUs) with functional currency other than the U.S. dollar.
Final regulations have been issued on transactions of U.S. taxpayers that have qualified business units (QBUs) with functional currency other than the U.S. dollar. Specifically, the final regulations:
cover combinations and separations of QBUs subject to Code Sec. 987 (Reg. 1.987-2 and Reg. 1. 987-4),
cover recognition and deferral of foreign currency gain or loss with respect to a QBU subject to Code Sec. 987 in connection with certain QBU terminations and other transactions involving partnerships (Reg. 1. 987-12), and
withdraw Temporary regulations that determine a partner's share of assets and liabilities of a Code Sec. 987 aggregate partnership (Temporary Reg. 1.987-7T). In general, the regulations prevent the selective recognition of Code Sec. 987 gain or loss.
The IRS declined to extend the applicability of these provisions. The final regulations retain the applicability dates of the temporary regulations, as extended by IRS guidance. The final regulations under Reg. 1.987-2 and Reg. 1. 987-4 generally apply to tax years beginning on or after the day that is three years after the first day of the first tax year following December 7, 2016. The final regulations under Reg. 1. 987-12 generally apply to any deferral event or outbound loss event that occurs on or after January 6, 2017.
Medicaid Waiver Payments Were Earned Income Even Though IRS Excluded Them From Gross Income
Medicaid waiver payments were earned income, even though IRS Notice 2014-7 treated them as "difficulty of care" foster care payments that were excluded from gross income. The Tax Court held that excluding the payments from earned income would improperly deny the taxpayers' earned income credit and the additional child tax credit.
IRS Excludes Medicaid Waiver Payments From Gross Income
The taxpayers received payments under a state Medicaid waiver program for proving care to their adult disabled children in the family home. IRC §131 excludes foster care payments from gross income, but it applies only when the foster individuals are placed in the caregiver's home by the state. Despite the statutory language, however, Notice 2014-7 treats Medicaid waiver payments as excludable "difficulty of care" foster payments. Thus, the taxpayers excluded the payments from their gross income.
Gross Income Vs. Earned Income
However, the taxpayers included the payments in their earned income, which allowed them to claim the earned income credit and the additional child tax credit. The IRS denied the credits, arguing that only gross income can be earned income. The Tax Court sided with the taxpayers.
No Deference For Notice 2014-7
The court concluded that Notice 2014-7 was entitled to little if any deference for two reasons:
The taxpayers' payments did not satisfy the plain statutory definition of excludable foster care payments.
The notice reversed the IRS's long-held position that payments like these were not foster care payments
Although the Medicaid waiver payments were not covered by §131, they absolutely fell within the statutory definition of "earned income." The IRS could not rely on Notice 2014-7 to deny credits that Congress clearly intended to provide for earned income.
IRS, Not Congress, Provided Double Benefit
Finally, the court recognized that the taxpayers were receiving an unintended double benefit, because they were getting tax credits that were based on tax-free income. However, this was only because the IRS:
unilaterally decided to exclude Medicaid waiver
payments from gross income, and
failed to argue that if the Tax Court included the payments in earned income, they should also be included in gross income.
1001 Bishop Street, Suite 1717, Honolulu, HI 96813 Ph: (808) 524-3660


If you wish to get rid of a new breakwater on the entire body you must have to aquire hold of the physician. They will subsequently examine the mole and look at it is form, coloration, as well as dimensions. Whenever they did this kind of they're going to then have the ability to pick which therapy for this is going to be desirable so as What Is The Medical Term For Mole Removal to remove it. Most often it will eventually possibly become removed by means of laser light surgery or section. The skin mole be time-tested to make certain it's not likely cancer. The actual sad point around the groyne removing is always that generally the scrape will continue to be subsequently. Nonetheless, these tips need to assist you to stay away from this occurrent. It is significant that you simply keep up What Is The Medical Term For Mole Removal your own medical professionals instruction manual thoroughly. After the mole continues to be taken away the medical doctor provides you with A briefing on the way to conserve the affected area. They'll offer you natual skin care guidelines that you need to keep up and for that reason factors to consider that you simply do this particular. In case stitches was required as soon as the to a greater extent ended up being eliminated it's crucial that you just ensure the spot is roofed, at the very least till the stitching happen to be What Is The Medical Term For Mole Removal absolutely removed. It is additionally important to maintain your area as clean up since you can so that germs is kept out. Preserving the skin moisturized is a thing that the dermatologist can guide. Go down to any local pharmacy or work with a lotion which will have been supplied by your physician. Moisturise the region twice a day. You should also discover A scar remedy treatment, and when not necessarily you will be able to find that from our local pharmacy also. These kinds of intervention treatments use 100 % natural ingredients as a way to reduce scare tissue. The particular cream will need to be What Is The Medical Term For Mole Removal given to the actual affected region several occasions daily regarding 'tween 12 months and also a dozen weeks. It's also wise to knead the location everyday besides as a way to boost circulation right now there. By rubbing in your neighborhood as well as improving movement you'd probably be sure that What Is The Medical Term For Mole Removal important nutrients can get for the area. These will be important in beefing up your epidermis next to possible scarring. Massage the spot firmly for a minimum of ii moments everyday. What Is The Medical Term For Mole Removal Just be sure you use sun block What Is The Medical Term For Mole Removal if you're out and about on the planet. This sunshine and so are about to dry your skin come out in addition to damage this. This, subsequently, probably will forestall more rapidly recovery all of which will help make skin damage a greater portion of a possible chance. Style and color . weather, try to use any sunscreen lotion that can protect against UVA as well as UVB radiation. Vitamin supplements Elizabeth pills can also be used. In case you puncture A ejection seat you'll be able to pass on the actual contents of the particular pill on the place. In the event you employ vitamin products Electronic into a specific section of your system will help you to be able to aliment skin and so forestall scarring damage. All round, the following tips will assist. When they will not, you must need to get back connection with your own health-care professional. They might provide you with farther advice on how to deal with the problem. If a keloid may glimpse chances are they can continue to provide you help with dealing with the item. Obtain far more info on . Take a look at What Is The Medical Term For Mole Removal wart- away from. net regarding obtaining remedies which have been encouraged.
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text:
Q: Rewrite Query String in Wordpress URL I am trying to rewrite a query string in Wordpress within the functions.php file, but it just isn't working. I'm probably making some dumb mistake, so any guidance is greatly appreciated!
I am trying to rewrite this URL: www.domain.com/car-lease-rate/?term1=true to www.domain.com/car-lease-rate/term1... or if possible www.domain.com/car-lease-rate/term/1.
add_action('init', 'add_my_rewrite');
function add_my_rewrite() {
    add_rewrite_rule('^car-lease-rate/term/([^/]+)','index.php?term1=$matches[1]','top');
}

A: You can try my code. I don't test it :p
add_action('init', 'add_my_rewrite');
function add_my_rewrite() {
    add_rewrite_rule('^car-lease-rate/term1/([^/]*)/?','index.php/car-lease-rate?term1=$matches[1]','top');
}

redpajama_set_name: RedPajamaStackExchange


text:
Q: Trying to update header sizing on mobile, but CSS isn't responding. Am I missing something? Trying to update CSS so that the headline adapts and becomes smaller when viewing mobile. Might be missing something or there's some other CSS that controls it but not sure where.
I've tried looking up various code, but testing it locally, still not getting desired result.
HTML

SIGN UP!

CSS
.cta-headline {
        color: $white;
        font-weight: 800;
        font-family: "Gilroy", "Helvetica", Helvetica, arial, sans-serif;
        font-size: 25px;
        letter-spacing: 3px;
        margin-bottom: -15px;
        margin-top: -20px;
        @media only screen and (min-width: 450px) and (max-width: 959px) {
          .cta-headline { font-size: 10px;
          }
        }
    }

I'd like the text to just scale appropriately down when viewing mobile compared to desktop.

A: Are you using Sass? Because CSS you shouldn't be nesting media queries inside the class. Just move the media query to its own line and it should work.
The min & max width is also redundant, it's much better to just remove the min and keep the max. If the width goes below 450px, create another media query where the max width is 450px
.cta-headline {
        color: $white;
        font-weight: 800;
        font-family: "Gilroy", "Helvetica", Helvetica, arial, sans-serif;
        font-size: 25px;
        letter-spacing: 3px;
        margin-bottom: -15px;
        margin-top: -20px;
    }
@media only screen and (max-width: 959px) {
        .cta-headline { font-size: 10px; }
    }


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text:
Let the Annual Canadian Persecutions Begin!
Captain Paul Watson to Appear in Court in Canada
Captain Paul Watson will appear before a Federal magistrate in Vancouver, B.C., on
March 15, 2007, to have a bench warrant lifted.
The warrant for Captain Watson's arrest was issued during the time that he was in Antarctica. The warrant is to answer charges that Captain Watson violated the Canada Shipping Act by escaping from Cape Town South Africa in a vessel that was no longer registered as a Canadian yacht.
"It really is a minor charge," said Captain Watson. "More like a traffic violation than a crime, but when the politicians are motivated they abuse the system to get what they want. The bottom line is that Canada was unhappy with our interventions against illegal Japanese whaling in the Antarctic in 2005 and 2006."
Of course, it is noteworthy to consider that Captain Watson has been ordered to appear in court on March 15th, the day of the worldwide protests against the annual Canadian seal slaughter thus preventing him from attending any of the demonstrations especially the big one to be held at Parliament Hill in Ottawa.
Last December, Captain Watson's acquittal on charges of breaking the Seal Protection Regulations by unlawfully approaching a sealer in the process of killing a seal was overturned and he was found guilty of the crime of witnessing a seal being slaughtered.
In Canada, it is illegal to witness or document the slaughter of a seal pup without a permit from the government of Canada, and the Canadian Department of Fisheries and Oceans (DFO) determines who is eligible for a permit. The DFO refused to issue permits to the Sea Shepherd crew in 2005.
Captain Watson has been fined $3,000 for witnessing a seal being killed and has been banned from the area where the seal hunt takes place for the next two years. If he returns to the seal slaughter in 2007 and 2008 he will be charged with criminal contempt.
"The government is becoming draconian in their efforts to prevent people from witnessing or interfering with the slaughter of seals," said Captain Watson.
Twelve Sea Shepherd crew were arrested in 2005 for approaching a seal slaughter. All but Captain Watson were fined $1,000. Dr. Jerry Vlasak refused to pay the fine and opted to serve 20 days in prison where he conducted a hunger strike in protest of the seal hunt in 2006. The fines have not yet been paid pending an appeal by Sea Shepherd to overturn the convictions based on the fact that the arrests are a violation of the Canadian Charter of Rights and Freedoms.
The Sea Shepherd crew were assaulted on the ice in 2005 by sealers. Despite the assaults being documented and the assailants identified, the RCMP refused to lay charges on the grounds that the "protestors had provoked the violence with their presence."
Video Clip of Assault by Sealers
Sea Shepherd Crew
Attacked by Sealers
WMV version
duration: 1:30, 2.9MB
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Sealing Captain Genge (in dark jacket with green stripes on arms) of the ship Brady Mariner approaches in a menacing way and invites a fight
Sea Shepherd crewmembers ward off the hits and shoves of Genge and his men
An RCMP helicopter hovers in the distance

redpajama_set_name: RedPajamaCommonCrawl


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White Graphene enables Combined Li-ion Electrolyte and Separator
April 11, 2016 by Jeff Shepard
A Rice University team has created robust 'white graphene' electrolyte and separator for lithium-ion batteries. The combined electrolyte and separator is usable voltages and in high temperatures. An essential part of the nonflammable, toothpaste-like composite is hexagonal boron nitride (h-BN), the atom-thin compound often called "white graphene."
The Rice team led by materials scientist Pulickel Ajayan said batteries made with the composite functioned perfectly in temperatures of 150 degrees Celsius (302 degrees Fahrenheit) for more than a month with negligible loss of efficiency. Test batteries consistently operated from room temperature to 150 degrees C, setting one of the widest temperature ranges ever reported for such devices, the researchers said.
"We tested our composite against benchmark electrodes and found that the batteries were stable for more than 600 cycles of charge and discharge at high temperatures," said lead author Marco-Túlio Rodrigues, a Rice graduate student. The results were reported in Advanced Energy Materials.
Last year members of a Rice and Wayne State University team introduced an electrolyte made primarily of common bentonite clay that operated at 120 degrees C. This year the team validated its hunch that h-BN would serve the purpose even better.
Rodrigues said batteries with the new electrolyte are geared more toward industrial and aerospace applications than cellphones. In particular, oil and gas companies require robust batteries to power sensors on wellheads. "They put a lot of sensors around drill bits, which experience extreme temperatures," he said. "It's a real challenge to power these devices when they are thousands of feet downhole."
"At present, nonrechargeable batteries are heavily used for the majority of these applications, which pose practical limitations on changing batteries on each discharge and also for disposing their raw materials," said Rice alumnus and co-author Leela Mohana Reddy Arava, now an assistant professor of mechanical engineering at Wayne State.
Hexagonal boron nitride is not a conductor and is not known to be an ionic conductor, Rodrigues said. "So we didn't expect it to be any obvious help to battery performance. But we thought a material that is chemically and mechanically resistant, even at very high temperatures, might give some stability to the electrolyte layer."
He said boron nitride is a common component in ceramics for high-temperature applications. "It's fairly inert, so it shouldn't react with any chemicals, it won't expand or contract a lot and the temperature isn't a problem. That made it perfect."
The material eliminates the need for conventional plastic or polymer separators, membranes that keep a battery's electrodes apart to prevent short circuits. "They tend to shrink or melt at high temperatures," said Rice postdoctoral researcher and co-author Hemtej Gullapalli.
Tests went better than the researchers anticipated. Though inert, the mix of h-BN, piperidinium-based ionic liquid and a lithium salt seemed to catalyze a better reaction from all the chemicals around it.
"It took almost two years to confirm that even though the boron nitride, which is a very simple formulation, is not expected to have any chemical reaction, it's giving a positive contribution to the way the battery works," Gullapalli said. "It actually makes the electrolyte more stable in situations when you have high temperature and high voltages combined." He noted all the electrolyte's components are nonflammable. "It's completely safe. If there's a failure, it's not going to catch fire," he said.
"Our group has been interested in designing energy storage devices with expandable form factors and working conditions," Ajayan said. "We had previously designed paper and paintable battery concepts that change the fundamental way power delivery can be imagined. Similarly, pushing the boundaries of working temperature ranges is very interesting. There is no commercial battery product that works above about 80 C. Our interest is to break this barrier and create stable batteries at twice this temperature limit or more."
Co-authors are Rice graduate student Kaushik Kalaga and Wayne State postdoctoral fellow Ganguli Babu. Ajayan is chair of Rice's Department of Materials Science and NanoEngineering, the Benjamin M. and Mary Greenwood Anderson Professor in Engineering and a professor of chemistry. The University of Texas at Austin through the Advanced Energy Consortium supported the project.
Solid Polymer Electrolyte to enable Rechargeable Li-ion and Alkaline Batteries
Electrolytic Capacitor Leakage Current
New Li-ions enable Higher-Capacity Energy Storage Systems
Sensor Enables Recharging Li-ions up to 5X Faster
Lithium Metal Battery Breakthrough Enabled by Ionic Liquid Electrolytes
Batteries and Portable Power
California Explores Mixing Hydrogen Into Natural Gas Pipelines
by Gary Elinoff
Unlocking Battery Materials' Capacity by Observing Lithium-ion Movement
Tesla and PG&E are Building California's Largest Virtual Power Plant
Future-proofing Li-ion Battery Production With Waterless Cathode Manufacturing Process


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"I never wanted to be an actor to earn lot of money" – Rajkummar Rao
What a year Rajkummar Rao had! From being an arthouse player he went into the 100-crore club with Stree. Earlier during the year he stunned us playing the terror kingpin in Hansal Mehta's Omerta. In a freewheeling interview with Subhash K Jha, Rajkummar expresses the joy of being able to do the films that he wants to.
Raj, 2018 was a remarkably fruitful year for you. How do you look back on the year?
It was a wonderful year for me, just like 2017. I got to play a deadly terrorist in Omerta and a lover boy in Stree, two very contrasting characters. I am so glad people are liking the kind of work I am doing and the kind of films that are being made in our industry. There is a lot of gratitude in me. I just want to keep pushing my boundaries and keep exploring different characters with my films.
You are now counted among the most dependable actors of Hindi cinema. Does that put an extra responsibility on you?
I can't work under pressure but yes, it's overwhelming when people think of you like this. I've always listened to my heart barring once or twice, and that's what has worked in my favour. I would keep doing films that I believe in and am very hopeful that I'll keep getting the same love from our audiences.
It is being said that you have increased your remuneration quite a bit. Is this true?
(Laughs) I've never thought or talked about money. I never wanted to be an actor because I wanted to earn lot of money. My reason was only my love for my work. I've my team who deals in all my monetary aspects but all I can say is I've never left and will never leave a film because of money.
Stree has put you in the Rs. 100 crore club did you think it would become such a rage? What do you feel made it so popular?
We knew we've made a unique and an entertaining film but am sure none of us thought that, it would turn out to become one of the most profitable films of the year. We as a team had lot of fun while making Stree and I guess that's what translated on screen and that's what resonated with the audience as well. I am not sure what clicked, perhaps, the genre, not many people have tried this genre in our cinema.
Speaking of popularity the phrase 'Bhikee pleej' became a catch phrase. Where did that come from? Are you asked by fans to say it?
It was always in the script and as an actor I loved doing those particular scenes. Yes, there are lot of people who say Bicky Pleajj whenever they meet me. It has lot of connect with the audience.
You are counted along with Ayushmann Khurrana and Vicky Kaushal as apart of Everyman Hero trio? How is your equation with them? Is there a sense of competition among you three?
I've immense respect for both Ayushmann and Vicky. They both are doing some wonderful work and I feel very happy about it. I share a great rapport with them. I honestly don't believe in competition in any art form. I think there is place for everyone and you've to be respectful towards others for their work.
Tell me about your projects in 2019 ?
There is Ek Ladki Ko Dekha Toh Aisa Laga with Sonam and Anil sir (Kapoor), Mental Hai Kya with Kangana Ranaut, Made in China with Boman sir (Irani) and Mouni Roy, Turram Khan with Nushrat Bharucha and most probably Anurag Basu's next with Fatima Sheikh. My hands are full. And that's how I like it.
When does one see you direct a film?
I'm very happy acting at the moment and not thinking of directing anytime soon but may be one day I would love to direct.
Also Read : "I want every year to be mine, every year should be of cinema" – Rajkummar Rao
Tags : Anil Kapoor, Anurag Basu, Ayushmann Khurrana, Bhikee pleej, Boman Irani, Ek Ladki Ko Dekha Toh Aisa Laga, Fatima Sheikh, Features, Hansal Mehta, Kangana Ranaut, Made In China, Mental Hai Kya, Mouni Roy, Nushrat Bharucha, Omerta, Rajkummar Rao, Sonam Kapoor Ahuja, Stree, Turram Khan, Vicky Kaushal
actor earn lot money Rajkummar Rao Wanted	2019-01-05