965 Transition Tax – IRS Issues Final Regs

  Code Sec. 965 generally requires U.S. shareholders to pay a “transition tax” on the untaxed foreign earnings of certain specified foreign corporations as if those earnings had been repatriated to the U.S. Specifically, in a specified foreign corporation’s last tax year which began before Jan. 1, 2018, the foreign corporation’s subpart F income is increased by any previously un-taxed, non-effectively connected post-1986 earnings and profits (E&P) of the corporation measured as of one of … Read More

Government Shut-Down and IRS Contingency Plan

The government shutdown has entered its third week and the traditional start of filing season is nearing. According to reports, IRS is working on a filing season contingency plan and expects to finalize its plan shortly. While IRS released a contingency plan in late November 2018 outlining activities that would and would not take place during a lapse in appropriations, this plan does not cover the 2019 fiscal year filing season. The partial government shutdown … Read More

New FATCA Regulations Proposed

On December 13, 2018, the Internal Revenue Service issued a proposal intended to reduce the regulatory burden with respect to FATCA, the Foreign Account Tax Compliance Act.  The proposal would eliminate withholding requirements on gross proceeds paid to certain foreign entities from the sales or other dispositions of property that could produce interest or dividends from sources within the U.S. It also includes a delay on pass-through payment withholding requirements; relief from treaty statement documentation; … Read More

Four People Charged in Panama Papers Investigation

Four people were charged in an indictment unsealed on December 4th, 2018 in the Southern District of New York with wire fraud, tax fraud, money laundering and other offenses in connection with their alleged roles in a decades-long criminal scheme perpetrated by Mossack Fonseca & Co. (“Mossack Fonseca”), a Panamanian-based global law firm, and related entities. Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Geoffrey S. Berman for the … Read More

Limit on FBAR Willful Violation Penalty is an Annual One

A district court has held that the monetary limit on the penalty for willfully failing to file a Report of Foreign Bank and Foreign Accounts (FBAR) is an annual one. The court found that, in reaching this conclusion, it was not required to consider the ongoing split of court opinions in previous cases about whether the limit on the penalty is defined by statute or reg. Under 31 USC 5314(a) and 31 C.F.R. 1010.350, every … Read More

IRS Signs Deal with Palantir Technologies to Catch Tax Cheats

A contract with Palantir Technologies will give the IRS new firepower to pursue tax cheats by connecting the dots in millions of tax filings, bank transactions, phone records, and even social media posts. By giving the agency more tools to find and prosecute cheats, the scope of the data mining Palintir will be empowered to perform has some tax lawyers fearing they’ll be blindsided as they try to defend clients facing large fines and jail … Read More

Security Worker Based in Iraq Entitled to Foreign Earned Income Exclusion

The Tax Court has determined that a taxpayer who worked for a security company in Iraq was a “qualified individual” entitled to the foreign earned income exclusion for the years at issue. The taxpayer’s overall course of conduct, including the facts that he repeatedly sought employment opportunities in Iraq, returned to the U.S. only as required by his employer, and had very limited ties to the U.S., showed that he was a bona fide resident … Read More

Tax Court Denies Deductions Claimed by Medical Marijuana Company

The Court also found that the government’s dismissal with prejudice of a previous civil forfeiture action against the taxpayer did not bar the deficiency determination. A business may deduct from its gross income all the ordinary and necessary expenses paid or incurred during the tax year in carrying on the trade or business. (Code Sec. 162(a)) However, under Code Sec. 280E, no “deduction or credit shall be allowed for any amount paid or incurred during … Read More