United States

The Tax Exchange - June 2016

New proposed reporting requirements for foreign-owned DREs

Newly announced proposed regulations would impose foreign information reporting requirements on domestic disregarded entities (DREs) wholly owned by a foreign person. Under the new rules, a domestic DRE wholly owned by a foreign person would be treated as a domestic corporation separate from its owner.

  • June 29, 2016

Tax treatment of a simple agreement for future equity is not a lock

Developed in 2013, a start-up-friendly funding mechanism called the simple agreement for future equity (SAFE) was conceived as a substitute for convertible debt. Perhaps you are one of the many investors who have purchased SAFE interests in start-ups.

  • June 27, 2016

Employer action advised on new health insurance notices

The Affordable Care Act (ACA) requires employers with at least 50 full-time or full-time equivalent employees to offer ACA-compliant health coverage. If your business is subject to this requirement, it can be penalized by the IRS if you fail to offer ACA-compliant health coverage and your employees obtain coverage with tax subsidies through the Health Insurance Marketplace (also known as the exchange).

  • June 23, 2016

Colorado clarifies treatment of downloaded software updates and agreements

A May 2016 general information letter from the Colorado Department of Revenue aims to help businesses seeking guidance regarding the tax treatment of purchases of electronically downloaded software updates and software maintenance agreements.

  • June 21, 2016

Gasoline gallon equivalents for alternative fuel tax credits

If your business uses alternative fuels, you may be eligible to claim the alternative fuels tax credit. Doing so requires some careful consideration of the way the credit is determined.

  • June 17, 2016

Texas comptroller denies COGS deduction for technology service provider

A recent court case emphasizes that the burden of proof is on the taxpayer when it comes to claiming deductions. On May 17, 2016, the Texas Comptroller of Public Accounts released a decision denying the costs of goods sold (COGS) deduction for costs incurred by a taxpayer in the business of information technology consulting services because the taxpayer did not demonstrate it was entitled to the deduction.

  • June 15, 2016

International impact of the proposed debt-equity regulations

Controversial proposed regulations allowing the IRS to recast certain related-party debt as equity may cause unintended international tax consequences.

  • June 13, 2016

Deductibility of accrued customer rewards

A U.S. Court of Appeals decision recently overturned the Tax Court’s determination regarding the deductibility of the estimated future cost of fuel discounts earned by its customers as part of a customer reward program. Although the case focused only on a specific program, the conclusion and its underlying principles could potentially apply to a wide variety of customer reward programs.

  • June 09, 2016

Tennessee court disallows retailers bad debt deduction

On May 11, 2016, the Tennessee Court of Appeals issued a decision holding that a retailer could not receive bad debt deductions for a third-party credit card provider’s bad debt write-offs.

  • June 07, 2016

Pension maximization (or "pension max")

Pension max is often offered to individuals as a way for couples to more affordably manage life insurance expense. But as with many financial “savings” strategies, there is significant risk involved. Risk that your life insurance agent may not be aware of or fully disclose.

  • June 01, 2016