The IRS on Wednesday issued final regulations under which the reduction in the personal exemption amount to zero for tax years 2018–2025 will not be taken into account in determining whether a person is a qualifying relative under Sec. 152(d)(1)(B) ( T.D. 9913 ). The regulations finalize without substantive change proposed regulations (REG-118997-19) issued in June providing a definition of "qualifying relative" after the law known as the Tax Cuts and Jobs Act, P.L.
Under the regulations, in defining a qualifying relative for purposes of various provisions of the Code that refer to the definition of a dependent in Sec. 152, including for purposes of the $500 credit for other dependents under Sec. 24(h)(4) and head-of-household filing status under Sec. 2(b), the exemption amount for 2018 is treated as $4,150 and, for 2019–2025, as the inflation-adjusted Sec.
And here's another article:
INSIGHT: A Little BEAT More on the Service Cost Method Exclusion
IRS & Treasury Issue Final BEAT Regulations
The centerpiece of the Proposed Regulations was the inclusion of a deduction waiver election (the "Waiver Election") to help taxpayers manage the base erosion percentage. The BEAT statutory language creates a cliff effect, in that a small amount of deductions can tip a taxpayer over the 3% base erosion percentage threshold, causing the BEAT to apply even to base erosion payments that were under the threshold.
Comments requested that taxpayers be allowed to reduce the amount of a previous deduction waiver. For example, if a taxpayer overestimated the amount of deductions that they needed to waive to reduce the base erosion percentage to below 3%, a maximally flexible approach would be to allow the taxpayer to reduce the extent of their previous waiver and thereby obtain the regular tax benefit of the deductions that the taxpayer ultimately had no need to waive.
The Real Cost of Biden's Plans - WSJ
In case you are keeping track:
INSIGHT: DOL Lacks a Convincing Legal Basis for Attempts to Discourage ESG/Sustainable Investing
The BEAT Goes On and On – New Final BEAT Regulations | Alston & Bird - JDSupra
As its name suggests, the BEAT of Section 59A introduced by the Tax Cuts and Jobs Act is meant to combat base erosion. It applies to corporate taxpayers (other than REITs, RICs, and S corporations) with annual gross receipts over $500 million for the prior three years and whose base erosion percentage is 3% or higher (2% for banks).
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The 2020 Final Regulations are very similar to the 2019 Proposed Regulations, with a few important changes. The 2020 Final Regulations provide guidance and additional clarification on determining a taxpayer’s aggregate group and how the BEAT applies to partnerships. The 2020 Final Regulations also make modifications to the potentially helpful election to waive deductions.
IRS Issues Section 1061 Proposed Regulations | K&L Gates LLP - JDSupra
Prior to 2017 Tax Cuts and Jobs Act (TCJA), private equity fund, hedge fund, and other investment fund or asset managers that received an interest in an entity taxed as a partnership for U.S.
Code Section 1061 recharacterizes certain long-term capital gain with respect to applicable partnership interests (APIs) as short-term capital gain if the capital gain arises from the sale or exchange of property held for less than three years. 1 An API is an interest in a partnership that is transferred to or held by a taxpayer in connection with the performance of substantial services by the taxpayer in an applicable trade or business (ATB). 2
Government Releases Second Tranche of Final Regulations on BEAT | McDermott Will & Emery - JDSupra
The centerpiece of the Proposed Regulations was the inclusion of a deduction waiver election (the “Waiver Election”) to help taxpayers manage the base erosion percentage. The BEAT statutory language creates a cliff effect, in that a small amount of deductions can tip a taxpayer over the 3% base erosion percentage threshold, causing the BEAT to apply even to base erosion payments that were under the threshold.
Comments requested that taxpayers be allowed to reduce the amount of a previous deduction waiver. For example, if a taxpayer overestimated the amount of deductions that they needed to waive to reduce the base erosion percentage to below 3%, a maximally flexible approach would be to allow the taxpayer to reduce the extent of their previous waiver and thereby obtain the regular tax benefit of the deductions that the taxpayer ultimately had no need to waive.
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