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Stolen 401(k) Funds • Corporate Comment on OECD Plan • NAV REITs

Dec. 14, 2019, 3:00 PM

This is a 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 look at corporate comments on the OECD’s “Unified Approach,” protecting 401(k) funds, the latest trend in REITs, purchase price allocations, and what it takes to really change your state of domicile. We’ll hear from:

  • Debra Mackey of Burr & Forman LLP on the fiduciary duty to protect 401(k) funds
  • Glenn DeSouza of Dentons on what corporations had to say about the OECD’s global tax proposal
  • Evan Hudson of Stroock & Stroock & Lavan LLP on the latest in REITs
  • Matthew Teadore and Jeremy Swan of CohnReznick on purchase price allocations
  • Robert Willens on how not to prove a change of domicile
The Empire State Building was built by a real estate syndicate.
Photographer: Ludovic Marin/AFP via Getty Images

U.S. multinational corporations had much to say about the OECD’s “Unified Approach” during the organization’s Nov. 21-22 public consultation meeting. Glenn DeSouza of Dentons highlights the MNCs’ comments and what they agreed and didn’t agree on. Read: Fortune 500 Speak Out on Unified Approach

A Section 401(k) plan participant is suing the plan sponsor, administrator, and related parties for unauthorized distributions from her account totaling more than $99,000. Debra Mackey of Burr & Forman LLP says regardless of the merits of the lawsuit or its resolution, the incident serves as a wake-up call for everyone involved in the defined contribution plan industry. Read: $99,000 Stolen From My 401(k)

Non-traded REITs have become a popular investment vehicle. Evan Hudson of Stroock & Stroock & Lavan LLP tells how the REIT structure has evolved and what is driving the growth in net asset value (NAV) REITs. Read: In the Beginning Was the REIT

In a taxable asset transaction, the total purchase price must be allocated to all of the tangible and intangible assets acquired, some of which may not have been previously recorded on the target’s books or have tax basis. Matthew Teadore and Jeremy Swan of CohnReznick outline considerations for buyers and sellers and tell how the 2017 tax law further complicated purchase price allocation. Read: Purchase Price Allocations—the Old and the New

The founder of a software company failed to avoid Massachusetts income tax on the gain from the sale of his company by claiming a change of domicile to Florida. Robert Willens highlights how going through the “ministerial steps intended to make a show of domicile for the taxing authorities“ wasn’t sufficient. Read: Software Executive Didn’t Abandon Massachusetts Domicile

From the Archive

Bloomberg Tax contributors help keep their colleagues up to date on developments in Section 401(k) plan administration.

Annuities provide the certainty of receiving a stream of income for life, but many employers remain reluctant to include them in their 401(k) plan. Dan Morgan of Blank Rome explained why.

Sometimes the IRS makes life easier. Jorge Leon, Jason Faust, and Julia Mader of Michael Best walked through the changes to the IRS programs that allow employee retirement plan sponsors to self-correct certain plan document and operational failures, including defaulted loans to employees.

Abbott Laboratories recently introduced a program to help its employees pay off their student loans through its 401(k) plan. Andrea Gehman of Johns Hopkins University showed how it works and suggested other possibilities to benefit employees.

Beyond Tax

What’s happening outside the world of tax?

Recent lawsuits against 403(b) retirement plan sponsors and fiduciaries at universities and organizations in the health care industry should remind plan sponsors and fiduciaries to take steps to minimize their risks of litigation, writes Steven D. Einhorn, an attorney with Brown Rudnick. Carefully considering fees, the number of recordkeepers, the performance of the plan’s investments, the types of investment funds offered, and the number of investment options are some of the issues he outlines. Read: Tips for 403(b) Plan Fiduciaries in Light of Recent University Litigation

Law firms are facing business threats from many directions and must embrace technology and innovation to survive and succeed, write Norton Rose Fulbright’s global head of technology and innovation Nick Abrahams and global head of dispute resolution and litigation Gerry Pecht. They offer tips and discuss the firm’s Transform program, which helps maximize the value of service provided to clients. Read: Exponential Threats Push Law Firms to Tipping Point

Innovation takes more than acquiring the newest technology. Hogan Lovells’ lead innovation partner Mark W. Brennan and Ryan Steadman, chief revenue officer at legal technology vendor ZERØ, agree that true innovation is establishing a culture that listens to clients and adopts new technologies that truly integrate with existing tools and processes. Read: What’s ‘Innovative’ in BigLaw? It’s More Than the Latest Tech Tools

With holiday parties in full swing, attorneys already struggling with addiction challenges will be even more tempted to turn to drugs or alcohol. Dr. Harshal Kirane, medical director of Wellbridge Addiction Treatment and Research, suggests law firms use the holiday party as a kickoff for offering more drink and food options, group activities, and setting positive employee wellness standards for 2020. Read: Big Law’s Little Addiction Secret Reveals Itself During the Holiday Season

Driven by serious security concerns about China and other nations, the U.S. government is retooling its federal regulatory apparatus to incorporate public safety and national security into commercial decisions—and will go beyond dialogue to start bringing other countries along in the process, writes King & Spalding’s Sumon Dantiki, former senior counselor to the director of the FBI. Read: What Global Companies Need to Know About U.S. National Security Policy

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John Harrington of Dentons in a comment letter to the OECD regarding the “Unified Approach” says the changes to nexus and profit allocation being discussed as part of Pillar One of the program of work would upend the rules that taxpayers and tax authorities have applied for decades.

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: Meg Shreve at mshreve@bloombergtax.com; Kathy Larsen at klarsen@bloombergtax.com

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