Tax

On December 31, 2018, the Department of Treasury and Internal Revenue Service released long-awaited proposed regulations (the “Proposed Regulations”) that address when modifications to the terms of tax-exempt bonds are treated as an exchange of existing bonds for newly issued (or “reissued”) bonds for purposes of section 103 and sections 141 through 150 of the Internal Revenue Code and when an issuer’s acquisition of its bonds results in such bonds ceasing to be outstanding for federal tax purposes.

This article outlines the Treasury Department’s initial guidance for implementation of the qualified opportunity zone tax incentive program, designed to encourage investment in low-income communities.

The IRS on April 11, 2018 released Revenue Procedure 2018-26 (Rev. Proc. 2018-26), which expands remedial action options in connection with certain post-issuance leases to private parties of facilities financed with tax-exempt bonds.

On December 22, 2017, H.R. 1, the Tax Cuts and Jobs Act (the “Tax Act”) was signed into law. As the first comprehensive U.S. federal income tax reform in over thirty years, the Tax Act includes dramatic changes to tax provisions applicable to businesses and their owners as well as individuals.

Last week, the long-awaited proposed bill for a comprehensive reform of the U.S. tax code (the “Proposed Tax Reform”) was finally released.

On July 13, 2017, the U.S. Tax Court issued its opinion in Grecian Magnesite Mining, Industrial & Shipping Co., SA v. Commissioner, in which the Tax Court held that a non-U.S. person who sells an interest in a partnership engaged in a U.S. trade or business generally is not subject to U.S. federal income tax, except to the extent such interest is attributable to the non-U.S. person’s share of the partnership’s U.S. real property interest.

On May 5, 2016, the IRS released new guidance regarding the renewable energy production tax credit (“PTC”) and energy investment tax credit (“ITC”) which most in the renewable energy industry will find favorable. 

On April 15, 2016, the IRS released a generic legal advice memorandum (GLAM 2016-001) (the “April GLAM”) addressing the impact of so-called “bad boy” guarantees (also known as nonrecourse carve-out guarantees) on the characterization of underlying partnership debt as recourse vs. nonrecourse under Section 752 of the Internal Revenue Code.

In late 2015, New York City Mayor Bill de Blasio signed into law a three-year extension of NYC’s biotechnology tax credit. The credit, which was set to expire on January 1, 2016, is now available through December 31, 2018.

Earlier this month, the IRS and Treasury Department proposed new Treasury regulations (the “Proposed Regulations”) under Section 385 of the Internal Revenue Code. The Proposed Regulations would significantly modify the tax analysis concerning the treatment of certain related-party instruments as debt vs. equity for U.S. federal income tax purposes. 

The “Protecting Americans from Tax Hikes” (PATH) Act was recently signed into law, and two provisions in particular benefit venture capital, private equity, and other investors owning or planning to purchase a corporation.

A company’s past NOLs can be used to offset taxable income in future years, subject to certain limitations. For companies that have operated at a significant loss and expect to turn a profit in the foreseeable future, the value of their NOL carryforward may be one of their most valuable assets on their balance sheet.

On December 19, 2014, the Internal Revenue Service (“IRS”) issued a private letter ruling (the “Ruling”) allowing corporations that manage physician practices through a so-called “friendly physician” arrangement to treat the physician practices as members of the corporations’ consolidated tax group for U.S. federal income tax purposes.