Daily Tax Report ®

Surprises in 199A • Why Multinationals Need APAs • Taxing Pot

May 11, 2019, 2:02 PM

This is the first weekend roundup of Bloomberg Tax Insights, which are written by practitioners featuring expert analysis on current issues in tax practice and policy. The articles featured here represent just a handful of the many Insights published each week. For a full archive of articles, browse by jurisdiction at Daily Tax Report, Daily Tax Report: State, and Daily Tax Report: International.

This week we feature:

  • David Sherwood and Kevin Hall of McDermott Will & Emery on problems with the “pass-through deduction”
  • Steven Wrappe and Matthew Kramer of Grant Thornton on the workings of IRS’s advance pricing agreement program
  • Andrea Gehman of Johns Hopkins University on possibilities for 401(k) plans
  • Robert Willens on Expedia’s tax-free reorganization
  • Robert Kline of McDermott on the economics and policy considerations of taxing marijuana

McDermott’s David Sherwood and Kevin Hall highlight problems with the final Section 199A pass-through deduction regulations with respect to partnership property. The authors explain how the regulations can lead to unexpected—and likely unintended—results. They also provide recommendations for further revisions. Read: Pass-Through Deduction Regulations and Partnership Basis Adjustments—Further Revisions Needed

Grant Thornton’s Steven Wrappe and Matthew Kramer explain the advantages of an advance pricing agreement for multinationals and why such an agreement is more important than ever. Read: Advance Pricing Agreements—Looking for Transfer Pricing Certainty in Uncertain Times

Andrea Gehman, in-house at Johns Hopkins University Applied Physics Laboratory LLC, explains how the Abbott Laboratories private letter ruling—allowing the company to use its 401(k) plan to help employees pay off their student loans—could be expanded to other programs to help employees. Read: What’s Next for Section 401(k) Contributions on Student Loans?

Now that nearly 25% of states have legalized marijuana, they have to figure out the best way to tax it. McDermott’s Robert Kline compares state experiences and discusses policy considerations. Read: Marijuana, Excise Taxes, and the Black Market

From the Archive

Bloomberg Tax Insights contributors have had much to say about the Section 199A deduction and the complexity of one the most touted features of the 2017 tax act intended to benefit small businesses. Catch up on expert analysis you might have missed with these practitioner articles:

  • Wes Sheumaker and Phillip Ogea of Eversheds Sutherland show how the deduction in the 2017 tax law works in the gig economy.
  • Venable’s Norman Lencz and Elizabeth Stieff explore some of the key differences between the proposed and final regulations for the 20% pass-through deduction for qualified business income under Section 199A.
  • Donald Williamson and David Harr of American University explain why converting from an S corporation to a C corporation may not be a good idea for many small businesses, despite the flat corporate tax rate of 21 percent established by the 2017 tax act.

Beyond Tax

What’s happening outside of the world of tax? This week we highlight a unique intersection of tax and constitutional law: the question of whether President Donald Trump or the Treasury Department must turn over Trump’s tax returns to Congress.

Cass Sunstein of Harvard University says Trump is probably not entitled to withhold his tax returns from the House Committee on Ways and Means—but it’s not simple. Read: Congress Has Upper Hand on Trump Tax Returns

George Washington University Law School’s Alan Morrison explains the intricacies of how the battle over Trump’s financial records will play out. Read: Sorting Through the Trump Subpoena Maze

Stuart Bassin of the Bassin Law Firm and co-author of a treatise on tax return confidentiality discusses the law governing congressional requests for Trump’s tax returns and the gaps and conflicts in that law. Read: The Law Governing Congressional Requests for President Trump’s Tax Returns

Exclusive Content for Bloomberg Tax Subscribers

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The 2017 tax act weighted down parachute payments to senior executives of tax-exempt organizations with an excise tax on “remuneration” in excess of $1 million, plus any excess parachute payment to a covered employee. Alden Bianchi and Alexander Song of Mintz Levin explain how to avoid a hard landing for the organization.

Investment decisions that take into account environmental, social, and/or governance risks will likely grow in prominence and prevalence over the coming years. George Michael Gerstein of Stradley Ronon show how fiduciaries of private and public retirement plans can manage these risks.

Bloomberg Tax Insights articles are written by experienced practitioners, academics, and policy experts discussing developments and current issues in taxation. To contribute, please contact Erin McManus at emcmanus@bloombergtax.com.

To contact the reporter on this story: Erin McManus in Washington at emcmanus@bloombergtax.com

To contact the editors responsible for this story: Kevin A. Bell at kbell@bloombergtax.com; Rachael Daigle at rdaigle@bloombergtax.com

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