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National Tax Update - December 2015

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Corporate Tax
Brian Gibney
Cheryl Joseph

Partnership Tax
Tom Nice
Accounting Periods and Methods
Richard Shevak
State and Local Tax
Patrick Duffany
International Tax
James Wall
Not-for-Profit Tax
Tom Lanning
December 2015

A company's approach to tax planning is critical in helping it meet financial and operational objectives. CohnReznick's National Tax Update newsletter is designed to provide timely information to help you stay abreast of changing tax regulations and incentives on the local, federal, and international level.

We hope you find this useful in helping you adopt a comprehensive and proactive tax strategy.


IRS Provides Guidance on Reasonableness of Compensation
The IRS has provided guidance, in the form of Field Attorney Advice memo #20154501F, as to the reasonableness of compensation under IRC §§162 and 174(a). These statutes limit a corporation’s deduction for salaries or other compensation to a “reasonable allowance for salaries or other compensation for personal services actually rendered.” 

Fifth Circuit Affirms Tax Court’s Ruling on Method of Accounting for Land Development Contracts

The Fifth Circuit upheld the U.S. Tax Court’s ruling that a taxpayer’s bulk sale agreements and custom lot contracts were not home construction contracts within the meaning of IRC §460(e), and therefore, the taxpayer could not account for these contracts using the completed contract method of accounting.
IRS Proposes Gift Tax on Gifts from Expatriates
On September 9, 2015, the IRS issued proposed regulations to give guidance under section 2801 of the U.S. tax code.  Section 2801 imposes a tax on U.S. residents and citizens receiving gifts and bequests from former U.S. citizens and long-term residents who expatriated and are classified as "covered expatriates."

International Tax Updates

On September 21, 2015, the Tax Court in RVI Guaranty Co. Ltd v. Commissioner, 145 TC No. 9 (2015), held that residual value insurance policies are insurance for federal income tax purposes and that the risks insured by such policies are insurable risks.
Base Erosion and Profit Sharing (BEPS) – Final Report
In October 2015, the Organization of Economic Cooperation and Development (“OECD”) released its final report on base erosion and profit shifting (“BEPS”) among developed and developing nations.


New York City’s New Commuter Benefits Law

On October 20, 2014, New York City Mayor Bill de Blasio signed the Affordable Transit Act into law.  The law, which takes effect in 2016, requires employers in the city to offer pretax transit benefits to their full-time employees.
Vermont Click Through Nexus Law Takes Effect
In 2011, Vermont enacted a “click-through” nexus law which set forth rules for when out-of-state vendors would be required to collect and remit Vermont sales tax. This law was delayed until the Vermont Attorney General determined that 15 or more states had similar provisions. On October 13, 2015, the Attorney General issued such a determination and Vermont’s “click-through” nexus law will be effective on December 1, 2015.

Any advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues. Nor is it sufficient to avoid tax-related penalties. This has been prepared for information purposes and general guidance only and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick LLP, its members, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.


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