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National Tax Update - June 2015


Contact a Tax Professional

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
 
June 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.
 

CORPORATE 

IRS Rules on Dispositions of Shares Under I.R.C. §424(c)(1) 

The IRS Chief Counsel’s Office issued an advice memorandum concerning the tax treatment of incentive stock options converted into the stock of an acquiring company. The focus of the memo is whether the exchange of shares of the employer for shares of the acquiring company will constitute a disqualifying disposition. See Chief Counsel Advice 201519031.

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IRS Rules on Capitalization of Management Termination Fees

In PLR 201518012 , the IRS determined whether a management termination fee should be capitalized under Treas. Reg. §1.263(a)-4(d)(7) and Treas. Reg. §1.263(a)-5.  Treasury Reg. § 1.236(a)-4 provides rules for applying I.R.C. §263 and the treatment of costs related to acquired and created intangibles. Treasury Reg. §1.236(a)-4(d)(7)(i) requires a taxpayer to capitalize amounts paid to terminate certain agreements to another party. Treasury Reg. §1.263(a)-5 provides rules for applying I.R.C. §263 to amounts paid or incurred to facilitate certain transactions.

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STATE AND LOCAL TAX

New Jersey: Potential "Millionaire" Tax and Moratorium on Corporate Tax Incentives Imposed

On May 7, 2015, New Jersey senators proposed a moratorium on future corporate tax incentives until an assessment of the program’s current effectiveness is completed. In addition, legislation imposing a “millionaire” tax to help alleviate the state’s public pension obligation was introduced.

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INTERNATIONAL TAX

Patent Box Regimes: Taxation of Intellectual Property 

Intellectual Property/Intangibles (“IP”) have become the mechanism to create wealth throughout the world.  The mobility of IP has led both large and small multinational companies to optimize the location of ownership of the IP to insure a low worldwide effective tax rate.  Examples of companies taking advantage of this effective tax rate minimization include Microsoft, Google and other technology companies.
 

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IRS Rules on Loans from Controlled Foreign Corporations (CFC)

In Chief Counsel Advice Memorandum 201516064 (the “CCA”), the IRS concluded that the 30 day rule short-term loan exception under Notice 88-108, 1988- 2 C.B. 446, does not apply to any obligation owned by a CFC unless all obligations held during the tax year by the CFC are held for less than 60 days (i.e., satisfy the 60-day-rule).

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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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