Tax News

CCH (cch.taxgroup.com) reports:

  Oregon has enacted a transportation law that extends two corporate excise (income) and/or personal income tax credits, sunsets another corporate and personal income tax credit, and increases the motor fuel tax rate, vehicle registration fees, and motor carrier taxes.

 

CCH (cch.taxgroup.com) reports:

  The dire fiscal situation facing most states hung over the 42nd Annual Conference of the Multistate Tax Commission (MTC), held in Kansas City, Missouri, July 29, 2009. During the leadership meetings on the following day, the MTC renewed its commitment to examine the Uniform Division of Income for Tax Purposes Act (UDITPA) for possible revision. The MTC members also heard a status report on federal legislation affecting state taxes, including possible Streamlined Sales Tax (SST) authorizing legislation, and received public comment regarding withholding requirements on mobile workers.

 

CCH (cch.taxgroup.com) reports:

  The IRS has issued proposed regulations updating the questions and answers inReg. §301.7611-1, relating to church tax inquiries and examinations to reflect changes in IRS offices caused by the Internal Revenue Service Restructuring and Reform Act of 1998 (P.L. 105-206). In mandating a restructuring of the IRS from a geographic structure to one based on taxpayer type, Congress provided a saving provision in
P.L. 105-206 to maintain the effectiveness of standing regulations even in the event of positions described in the regulations being eliminated. However, references in the regulations to positions no longer in existence created some confusion; therefore, Reg. §301.7611-1 questions and answers 1, 7, 9, 10, 11, 15, 16 and 17 have been updated to reflect and clarify these changes. The proposed amendments make the following substitutions:

  "Director, Exempt Organizations" for "Regional Commissioner" (answers 1, 7, 9, 15, 17); and

  "Division Counsel/Associate Chief Counsel, Tax Exempt and Government Entities" for "Regional Counsel" (answers 10, 11).

  In addition, references to "the Assistant Commissioner (Employee Plans and Exempt Organizations)" have been replaced by either "the Commissioner, Tax Exempt and Government Entities" or "the Deputy Commissioner, Tax Exempt and Government Entities" (answer 16).

  Written or electronic comments will be considered if they are timely submitted. Requests for a public hearing will be honored if requested in writing by any person timely submitting written or electronic comments. The details of any such public hearing will be published in the Federal Register.

Proposed Regulations, NPRM REG-112756-09, 2009FED ¶49,426

Other References:

 
Code Sec. 7611

  CCH Reference - 2009FED ¶42,912

  Tax Research Consultant

  CCH Reference - TRC IRS: 18,406
CCH Reference - TRC IRS: 18,406.05
CCH Reference - TRC IRS: 18,406.10
CCH Reference - TRC IRS: 18,406.15
CCH Reference - TRC IRS: 18,406.20
CCH Reference - TRC IRS: 18,406.25
CCH Reference - TRC IRS: 18,406.30
CCH Reference -
TRC IRS: 21,202
CCH Reference -
TRC IRS: 21,206
CCH Reference -
TRC IRS: 21,208
 

CCH (cch.taxgroup.com) reports:

  The IRS has issued final regulations that provide guidance regarding the treatment of controlled services transactions under Code Sec. 482 and the allocation of income from intangible property, in particular with respect to contributions by a controlled party to the value of an intangible owned by another controlled party. The final regulations also modify regulations under
Code Sec. 861 with respect to stewardship expenses, so that these provisions are consistent with the changes to the Code Sec. 482 regulations concerning controlled services transactions.

  CCH Comment.
Code Sec. 482 generally provides that the IRS may allocate gross income, deductions and credits between or among two or more taxpayers owned or controlled by the same interests in order to prevent evasion of taxes or to clearly reflect income of a controlled taxpayer. Final, temporary and proposed regulations issued in 2006 relating to the treatment of controlled service transactions, the allocation of income from intangible property, and stewardship expenses generated a number of comments from taxpayers, their representatives, and industry and professional groups.

  Both the format and the substance of the final regulations are generally consistent with the 2006 temporary regulations, and make clear that application of the services cost method (SCM) is a matter within the control of the taxpayer, as previously indicated in Notice 2007-5, 2007-1 CB 269. In order for the SCM to be applicable, the final regulations clarify that the service must be a covered service, cannot be an excluded activity, and cannot be precluded from constituting a covered service by reason of the business judgment rule, and adequate books and records must be maintained with respect to the service.

  Although comments were received requesting that the proposed list of specified covered services be expanded, the final regulations do not add to the list set forth in Rev. Proc. 2007-13, 2007-1 CB 295. In response to comments concerning the business judgement rule, the final regulations clarify that it is determined on a controlled group basis and determined by reference to a trade or business of the controlled group. The final regulations also clarify language concerning the comparable uncontrolled services price method, provide additional guidance concerning the application of the comparable profit split and residual profit split methods to controlled services transactions in Reg. §1.482-9(g) and Reg. §1.482-6(c)(3)(i)(, and clarify certain examples with respect to the profit split method and economic substance considerations.

  The regulations conforming the stewardship expense regulations under Code Sec. 861 are applicable for tax years beginning after December 31, 2006. The Code Sec. 482 regulations are applicable for tax years after July 31, 2009, but may by election be applied retroactively to any tax year beginning after September 10, 2003.

T.D. 9456, 2009FED ¶47,025

Other References:

 
Code Sec. 482

  CCH Reference - 2009FED ¶22,282B

  CCH Reference - 2009FED ¶22,282CK

  CCH Reference - 2009FED ¶22,282D

  CCH Reference - 2009FED ¶22,282EK

  CCH Reference - 2009FED ¶22,282F

  CCH Reference - 2009FED ¶22,282GE

  CCH Reference - 2009FED ¶22,282J

  CCH Reference - 2009FED ¶22,282JK

  CCH Reference - 2009FED ¶22,282N

  CCH Reference - 2009FED ¶22,282R

  CCH Reference - 2009FED ¶22,282SG

  CCH Reference - 2009FED ¶22,282T

  CCH Reference - 2009FED ¶22,282U

 
Code Sec. 861

  CCH Reference - 2009FED ¶27,138

  CCH Reference - 2009FED ¶27,139

  CCH Reference - 2009FED ¶27,140

  CCH Reference - 2009FED ¶27,141

  CCH Reference - 2009FED ¶27,142

  CCH Reference - 2009FED ¶27,143

  CCH Reference - 2009FED ¶27,145

 
Code Sec. 6038A

  CCH Reference - 2009FED ¶35,561A

  CCH Reference - 2009FED ¶35,561C

 
Code Sec. 6662

  CCH Reference - 2009FED ¶39,653C

  Tax Research Consultant

  CCH Reference - TRC ACCTNG: 30,104.10
CCH Reference - TRC ACCTNG: 30,106
CCH Reference - TRC INTL: 15,110.10
 

CCH (cch.taxgroup.com) reports:

  Following reports that the "Cash for Clunkers" (CARS) program had been suspended because of depleted funds, Congress and the White House on July 31 scrambled to ensure that consumers can continue to buy cars under the program. The House immediately took up and passed a bill (HR 3435) providing an additional $2 billion to keep the program running. The final vote was 316 to 109.

  The additional funds come from a loan guarantee for clean energy included in the American Recovery and Reinvestment Act of 2009 (2009 Recovery Act) (P.L. 111-5) and would extend the program through September 30, 2010. Rep. Edward J. Markey, D-Mass., one of the co-authors of the "Cash for Clunkers" program, said he would push to ensure that the money is replaced in the environmental fund.

  Sen. Carl Levin, D-Mich., said that the program had proven "hugely successful" and that he had been assured by the White House that consumers could continue to purchase vehicles under the program until further notice. Levin said that the Senate is also going to seek additional funds to extend the program. The Senate will likely take up the measure, which would be open to amendments, during the week beginning August 3. However, passage may not be as smooth in the Senate because some senators plan to seek higher fuel-efficiency standards in the deal.

  Sens. Dianne Feinstein, D-Calif., and Susan M. Collins, R-Maine, on July 31 urged the Department of Transportation to promptly provide Congress with a detailed evaluation of the effectiveness of the CARS program. In a letter to Transportation Secretary Ray LaHood, Feinstein and Collins requested a detailed analysis of how the program has worked to date, including the make and model of the vehicles purchased, the fuel efficiency of purchased vehicles, and the condition of vehicles traded-in. "The tremendous number of sales in the first week of this program demonstrates that the CARS Act (Consumer Assistance to Recycle and Save Act of 2009, approved as part of the 2009 Supplemental Appropriations Act for Iraq, Afghanistan, Pakistan and Pandemic Flu (P.L. 111-32) (TAXDAY, 2009/06/25, W.1)) has succeeded in increasing new vehicle sales, but Congress needs this data in order to determine if the fleet modernization program delivered significant fuel economy gains and oil savings," stated the lawmakers.

  President Obama is "enormously pleased" that the House bill proposes to use $2 billion from energy efficiency funds contained in the
2009 Recovery Act, according to White House Press Secretary Robert Gibbs. Gibbs said the CARS program benefits taxpayers because their new cars are more fuel-efficient.

  Obama on June 24 signed legislation to boost the sale of vehicles at financially strapped U.S. automobile dealerships (TAXDAY, 2009/06/25, W.1). The program provides $1 billion in tax-free vouchers to automobile dealers who participate in the new program. The program vouchers, worth $3,500 or $4,500, are given to dealers when consumers trade in old vehicles for ones with higher fuel efficiency. The vouchers are considered to be taxable income for the dealers but not the customers who purchase a new vehicle.

  Congress created the new program as part of the CARS Act. Generally, the trade-in vehicle must have a fuel economy value of 18 miles-per-gallon (mpg) or less. The vehicle must be in drivable condition and have been continuously insured and registered in the same owner's name for one year before trade-in. Vehicles manufactured more than 25 years ago generally are ineligible for the program. The new law limits the number of vouchers to one per customer, including joint registered owners of a single eligible trade-in vehicle.

  By Jeff Carlson and Paula Cruickshank, CCH News Staff

Tax Analysts report: