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The notice of proposed rulemaking providing rules under section 965 published in the Federal Register on August 9, 2018, provided, among other things, for a basis election to be made by United States shareholders in certain circumstances. The guidance impacts proposed regulations issued in August 2018.
 Under the guidance:

1. U.S. shareholders are allowed an extended time to make the basis adjustment election under the reduction rules of Code Sec. 965(b). This Notice 2018-78 announces that the due date for the basis election that would otherwise be required to be made before the final regulations are published will be extended to 90 days after the publication of the final regulations. Further, elections made in the interim will be revocable.
2. A more taxpayer favorable rule will be included in the final regulations for determining the aggregate foreign cash position of a U.S. shareholder that is a member of a consolidated group. The determination of the aggregate foreign cash position of a United States shareholder that is a member of a consolidated group, which were inconsistent with the more taxpayer-favorable rule announced in Notice 2018-07. and
3. U.S. shareholders affected by Hurricane Florence are provided an extended period to file election statements and transfer agreements. This Notice 2018-78 provides a postponement for taxpayers affected by Hurricane Florence to make elections, and file transfer agreements, related to section 965. 

The proposed regulations generally provide that a U.S. shareholder’s basis in its stock or property of the deferred foreign corporation (DFIC) is increased by the amount of the U.S. shareholder’s Code Sec. 965(a) inclusion amount with respect to the DFIC. The amount that would otherwise be included under subpart F may be reduced under Code Sec. 965(b) if the taxpayer is a U.S. shareholder with respect to at least one DFIC and one E&P deficit foreign corporation. In general, no adjustments to the basis of stock or property are made to take into account the reduction of the Code Sec. 965(a) earnings amount under the reduction rules. A taxpayer may, however, elect to make relevant basis adjustments as a result of the reduction rules in certain circumstances.

 

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www.TaxAid.com or www.OVDPLaw.com or Toll Free at 888-8TaxAid (888) 882-9243

Sources:

 

Notice 2018-78 

 

CCH 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Here is a sample: New Tax Transcript (PDF)

Because the taxpayer’s SSN no longer can be used as a tracking number for third-party requesters, the IRS is creating a Customer File Number that third parties may use as an identifying number. The Customer File Number created by third party on Form 4506-T/T-EZ, Request for Transcript of Tax Return, will populate on the transcript, allowing a redacted transcript to be matched to a taxpayer.  

Have a Tax Problem?

 

 

Contact the Tax Lawyers at
Marini & Associates, P.A. 

 

 for a FREE Tax Consultation Contact us at: 

www.TaxAid.com or www.OVDPLaw.com

or Toll Free at 888-8TaxAid (888 882-9243). 





The IRS still makes no systemic use of CTR data in examinations.  Although IRS management agreed with TIGTA’s recommendation in a September 2010 report and cited steps taken to develop examination referrals from the CTRs, the IRS is still not systemically using the CTRs to identify and pursue potentially noncompliant individuals. It is also not effectively tracking information referrals from Bank Secrecy Act examiners to the Examination function.  Finally, some examiners are not documenting that they are considering available CTR information in their audits.

1. Establish formalized procedures for processing Bank Secrecy Act Program referrals and begin tracking the time required to send referrals to the Field Exam Support Team, and
2. Clarify formal Internal Revenue Manual procedures to assist examiners in their consideration of CTR data in examinations.  

Marini & Associates, P.A. 

 

 

for a FREE Tax HELP Contact us at:

www.TaxAid.com or www.OVDPLaw.com or

Toll Free at 888-8TaxAid (888) 882-9243

 The Ninth Circuit disagreed with the IRS, saying there is nothing on the form for reporting inconsistencies that “directs or requires the taxpayer to report figures taken directly from the corporation’s return.”

The three-judge panel also rejected the IRS’ contention that the 20-plus pages of information that Rubin filed to explain the inconsistencies were unduly burdensome.

“That fact does not … impose such a burden that the IRS could not reasonably accomplish its duty, particularly in light of the size of the claimed refund,” the panel said.

The ruling reverses an October 2016 decision from a lower district court in favor of the government. That decision, from U.S. District Judge R. Gary Klausner, concluded that the pro forma tax return Rubin had attached for Focus to his individual amended tax returns did “not constitute an an attempt to amend Focus’ tax returns.”

The case now returns to Judge Klausner’s court for further proceedings.

Rubin had claimed in his lawsuit that the net income for Focus had been substantially overstated for the 2000 tax year, and since the company’s income flowed through to him, he ended up owing substantially more in income tax payments.

According to court documents, Focus’ largest customers had become concerned about the possible misuse of funds and sued the company to prevent further payments. Eventually, Focus’ creditors put it into involuntary bankruptcy, and a bankruptcy trustee was appointed. The trustee deemed the company’s receivables worthless.

Rubin initially filed his personal tax return based on the income reported in Focus’ return for 2000. He later filed an amended return for that year as well as the two preceding years. He also filed a pro forma amended tax return for Focus reflecting the different treatment of bad debt expenses and cancellation of indebtedness income, according to the Ninth Circuit’s opinion.

The opinion also noted that Rubin had submitted a chart and explanations describing amounts as they were originally reported, the net change and the amended amounts. The case is Thomas Rubin v. USA, case number 16-56633, in the U.S. Court of Appeals for the Ninth Circuit.