Tax News

CCH (cch.taxgroup.com) reports:

  Legislation enacts changes to the Vermont seed capital credit and the downtown and village center credit against Vermont personal income, corporate income, bank franchise, and insurance taxes. The bill also makes identical changes to the incentive credit against personal income tax and business solar incentives credits against personal and corporate income tax that were made by H.B. 446, Laws 2009 (see TAXDAY, 2009/06/04, S.37).

CCH (cch.taxgroup.com) reports:

  Legislation has been enacted that decouples the Oklahoma corporate and personal income tax from some of the provisions of the federal American Recovery and Reinvestment Act of 2009 (Recovery Act) (P.L. 111-5), creates a personal income tax exemption for awards for participation in a competitive livestock show event, amends the corporate and personal income tax credit for investment in depreciable property used in manufacturing or aircraft facility, and amends personal income tax withholding semiweekly payment requirements.

CCH (cch.taxgroup.com) reports:

  Missouri legislation has been enacted that expands and otherwise revises a number of corporate and personal income tax credit programs, increases the outstanding shares and surplus threshold used to calculate the annual franchise tax, and makes transportation development district sales tax changes.

CCH (cch.taxgroup.com) reports:

  Congress could debate the future of the federal estate tax this fall, according to speakers at a briefing on the tax in Washington, D.C., on June 4. Douglas Holtz-Eakin, former director of the Congressional Budget Office (CBO) and advisor to presidential candidate John McCain, defended eliminating the estate tax but acknowledged that lawmakers will likely extend or make permanent the current rate and exemption amount.

2009 Rate and Exemption

  Under current law, the federal estate tax is scheduled to expire after 2009 but return after 2010. The federal estate tax would reach 55 percent on estates valued at more than $1 million after 2010.

  The Obama administration has proposed making permanent the 2009 maximum estate tax rate of 45 percent with a $3.5 million exemption ($7 million for married couples) (TAXDAY, 2009/04/30, C.1). The Taxpayer Certainty and Relief Bill of 2009 (Sen 722 ), introduced by Senate Finance Committee (SFC) Chairman Max Baucus, D-Mont., would make these amounts permanent after 2009.

  However, not all Democrats agree with making the 2009 amounts permanent. Some Democrats have expressed support for extending the 2009 exemption amounts two or thee years, rather than making them permanent. Many Republicans support repealing the estate tax, but the GOP lacks the votes in the House or Senate to eliminate the tax entirely.

  The SFC has not yet scheduled a hearing on Baucus'bill. Several lawmakers and congressional staff members have indicated that the SFC may take up the bill in the autumn.

  "Congress' choice matters," Holtz-Eakin said. "If the estate tax goes back to 55 percent, it will have a strong negative impact on the probability that small businesses will expand their payrolls." Allowing the estate tax to revert in 2011 to 55 percent with the exclusion reduced to $1 million would "eventually reduce gross domestic product by $183 billion," Stephen J. Entin, president, Institute for Research on the Economics of Taxation, added.

Business Planning

  Uncertainty over the future reach of the estate tax impacts business planning, Eugene Sukup, chair, Sukup Manufacturing Co., Sheffield, Iowa, said. Sukup explained that he intends for his children to inherit the family business, but worries that his children could be forced to sell the business to pay federal estate tax after his death.

  "A low estate tax rate provides an incentive to grow the family business," Dick Patten, president of the American Family Business Institute, which sponsored the briefing, said. "A high estate tax provides the opposite."

  By George L. Yaksick, Jr., CCH News Staff

CCH (cch.taxgroup.com) reports:

  Two limited liability companies taxed as partnerships and engaged in unspecified litigation with the IRS were able to designate a new tax matters partner (TMP) common to both entities and change the caption of their cases where the designation satisfied the controlling requirements of the regulations under Code Sec. 6231(a)(7). The entities had formally amended their operating agreements to name the new member as the TMP. In addition, the court rejected the IRS's argument that the designation was invalid because the new TMP would not have any tax liability determined in the relevant case. The TMP serves as a fiduciary; personal interest is not required.

Gateway Hotel Partners, LLC, TC Memo. 2009-128, Dec. 57,844(M)

Other References:

 
Code Sec. 6231

  CCH Reference - 2009FED ¶37,849.05

  CCH Reference - 2009FED ¶37,849.45

  Tax Research Consultant

  CCH Reference - TRC PART: 60,102

CCH (cch.taxgroup.com) reports:

  The IRS has clarified that a transaction under the Economic Stabilization Act of 2008 (EESA) (P.L. 110-343) that involves the acquisition by or on behalf of the Treasury Department of preferred stock, common stock, warrants to purchase common stock or other types of equity of a financial institution or other entity is not an event with respect to which a payment can be made under a Code Sec. 409A nonqualified deferred compensation plan. Pursuant to Code Sec. 409A(a)(2)(A)(v) and Reg. §1.409A-3(a)(5), this type of transaction, referred to as a Treasury EESA Equity Acquisition Transaction, is not a change in ownership or effective control, or a change in the ownership of a substantial portion of the assets of the corporation, collectively referred to as a change in control event. Consequently, the transaction is not a permissible Code Sec. 409A payment event and compensation that would otherwise be deferred is currently taxable to plan participants.

  A nonqualified deferred compensation plan will not fail to satisfy the plan document requirements of Code Sec. 409A(a) and the regulations thereunder simply because the plan does not explicitly provide that a Treasury EESA Equity Acquisition Transaction will not trigger a payment under the plan. For this purpose, it is irrelevant whether the plan incorporates the definition of a change in control event by reference to the final regulations (Reg. §1.409A-3(i)(5)) or sets forth a definition of a change in control event that otherwise meets the requirements of the final regulations.

  This guidance is effective June 4, 2009. The Treasury Department and the IRS intend to amend the regulations under Code Sec. 409A(a) to incorporate the guidance. The amended regulations will be applicable to Treasury EESA Equity Acquisition Transactions entered into on or after June 4, 2009.

Notice 2009-49, 2009FED ¶46,393

Other References:

 
Code Sec. 409A

  CCH Reference - 2009FED ¶18,960.025

  Tax Research Consultant

  CCH Reference - TRC COMPEN: 15,056.15
CCH Reference - TRC PLANRET: 3,206.35

Tax Analysts report: