Tax News

CCH (cch.taxgroup.com) reports:

  Legislation has been enacted that modifies Missouri property tax laws by requiring tax rate rollbacks by all political subdivisions in reassessment years, changing the way voter-approved tax increases are applied to assessed values, and changing the time line for the assessment of property taxes and appeal procedures. Provisions of the personal income tax property tax credit and the property tax homestead exemption have also been amended.

 

CCH (cch.taxgroup.com) reports:

  The Florida corporate income tax credit for contributions made to nonprofit scholarship-funding organizations is amended to provide that children in foster care or siblings of continuing students are eligible to receive scholarships, to increase the total amount of credits that may be granted in a fiscal year, to allow organizations to use a percentage of contributions for administrative expenses, to limit the amount of unused contributions that may be carried over, and to increase the amount of scholarships that may be granted to each student per fiscal year.

 

CCH (cch.taxgroup.com) reports:

  Effective for taxable periods beginning after 2008, Delaware gross receipts tax rates are temporarily increased. Effective for taxable periods beginning after March 31, 2012, the rate increases are repealed, and rates will revert to the percentages that were in effect prior to the increase. New rates are as follows:

  -- occupational licensees: 0.384%;

  -- contractors: 0.624%;

  -- manufacturers: 0.180%;

  -- wholesalers: 0.384%;

  -- petroleum wholesalers: 0.240%;

  -- food processors: 0.192%;

  -- commercial feed dealers: 0.096%;

  -- retailers: 0.720%;

  -- transient retailers: 0.720%;

  -- restaurant retailers: 0.624%;

  -- farm machinery retailers: 0.096%;

  -- grocery store retailers: 0.315% of the first $2 million per month, 0.590% thereafter;

  -- lessees: 1.92%; and

  -- lessors: 0.288%.

H.B. 513, Laws 2008, effective as noted above.
 

CCH (cch.taxgroup.com) reports:

  The IRS has suspended several requirements for low-income housing credit projects in Wisconsin, in response to severe storms and flooding that destroyed or damaged many homes. The suspension allows owners of approved low-income housing credit projects to use vacant units to provide temporary housing to displaced individuals. The suspension is effective on June 14, 2008.

  The suspension of the requirements applies when these conditions are satisfied:

  (1) The displaced person must have resided in a Wisconsin jurisdiction designated for Individual Assistance by the Federal Emergency Management Agency as a result of the severe storms and flooding that began on June 5, 2008.

  (2) The Wisconsin Housing and Community Development Authority must approve the housing project for the suspension.

  (3) The project owner must meet certification and recordkeeping requirements with respect to each displaced individual.

  (4) Rents for the low-income units that house displaced individuals must not exceed the existing rent-restricted rates for the low-income units.

  (5) Existing tenants in occupied low-income units cannot be evicted or have their tenancy terminated as a result of efforts to provide temporary housing for displaced individuals.

  The Wisconsin Housing and Community Development Authority will establish a temporary housing period for each housing project, which cannot extend beyond July 31, 2009. During the temporary housing period, certain income limits are suspended; the nontransient use requirement does not apply; and units occupied by displaced persons do not have to be marketed to low-income individuals.

  In addition, for the first year of the credit period during the temporary housing period, displaced persons will be deemed to be low-income tenants for purposes of determining the project's qualified basis and for meeting its 20-50 test or 40-60 test. During the temporary housing period after the first year of the credit period, temporary occupancy of a vacant unit by a displaced person will not affect the status of the unit (that is, market-rate, low-income or never previously occupied). Also, if the income of occupants in low-income units exceeds 140 percent of the applicable income limitation, the temporary occupancy of a unit by a displaced individual will not cause application of the available unit rule. However, displaced individuals will no longer be deemed to be low-income tenants.

Notice 2008-61, 2008FED ¶46,507

Other References:

 
Code Sec. 42

  CCH Reference - 2008FED ¶4385.27

  Tax Research Consultant

  CCH Reference - TRC BUSEXP: 54,220.30

CCH (cch.taxgroup.com) reports:

  The Treasury and IRS have issued temporary and proposed regulations regarding the treatment of aircraft and vessel leasing income under
Code Secs. 954,
956 and 367. The temporary regulations reflect changes made by the American Jobs Creation Act of 2004 (P.L.108-357), which repealed the foreign base company shipping provisions and liberalized the marketing safe harbor for aircraft or vessels engaged in foreign commerce. The temporary regulations incorporate the rules of Notice 2006-48, 2006-1 CB 922, which was issued to provide interim guidance, with minor changes. The temporary regulations generally apply on or after May 2, 2008.

  In general, active rents can be excluded from subpart F foreign personal holding company income (FPHCI) when rents are derived from leasing property as a result of the marketing functions of a lessor CFC, if the organization in the foreign country is substantial in relation to the amount of rents derived, based on all of the facts and circumstances. Under a safe harbor test, an organization is substantial in relation to the amount of rents, if active leasing expenses equal or exceed 25 percent of the adjusted leasing profit. The temporary regulations preserve the existing test for determining the substantiality of a foreign organization and include the special marketing safe harbor for aircraft and vessels engaged in foreign commerce. Accordingly, for purposes of aircraft or vessels leased in foreign commerce, an organization will be considered substantial if active leasing expenses, equal or exceed 10 percent of the adjusted leasing profit. The definitions of foreign commerce and the predominant use of an aircraft or vessel outside of the United States are consistent with the legislative history of P.L. 108-357. The temporary regulations also clarify that certain finance leases and acquired leases are eligible for the exclusion

  Temporary regulations issued under Code Sec. 956 provide an exclusion from the definition of U.S. property for aircraft or vessels that generate leasing income that is excluded from FPHCI under the active rents exception.

  Temporary regulations issued under Code Sec. 367 are amended with respect to the rules that treat a U.S. person's transfer of property to a foreign corporation as a nonrecognition transaction if the property is used in the active conduct of a trade or business outside of the United States. Under the temporary regulations, the principles of the active rents exception in Code Sec. 954(c)(2)(A) and the related regulations will apply to determine whether a trade or business that produces rents or royalties is actively conducted. In determining whether certain types of property are transferred for use in the active conduct of a trade or business outside of the United States, a special rule is added to cover aircraft and vessels in foreign commerce. Under the rule, whether leased personal property is predominately used outside of the United States is determined under the Code Sec. 954 temporary regulations. The issue of how to determine whether an aircraft or vessel was used predominantly outside of the Unite States for a particular month for purposes of Code Sec. 367 recapture remains under study. Until guidance is issued, taxpayers may use any reasonable method to make this determination.

  The text of the temporary regulations also serves as the text of the proposed regulations. Written or electronic comments and requests for a public hearing must be received by October 1, 2008.

T.D. 9406, 2008FED ¶47,045

Proposed Regulations, NPRM REG-138355-07, 2008FED ¶49,814

Other References:

 
Code Sec. 367

  CCH Reference - 2008FED ¶16,642

  CCH Reference - 2008FED ¶16,644

  CCH Reference - 2008FED ¶16,645

 
Code Sec. 954

  CCH Reference - 2008FED ¶28,535B

  CCH Reference - ¶ 2008FED ¶28,535BC

 
Code Sec. 956

  CCH Reference - 2008FED ¶28,573

  CCH Reference - 2008FED ¶28,574

  Tax Research Consultant

  CCH Reference - TRC INTLOUT: 9,106.05
CCH Reference - TRC INTLOUT: 9,256.05
CCH Reference -
TRC INTL: 30,068
 

Tax Analysts report: