Tax News

CCH (cch.taxgroup.com) reports:

  The Ohio Department of Taxation has issued a sales and use tax information release to explain changes to the way sales of tangible personal property and services are sourced. Beginning January 1, 2010, Ohio vendors that had previously switched to destination sourcing for delivery sales must source their sales to the location where the order was received. Remote sales made by Ohio vendors, via mail order, telephone, or the Internet, must also be sourced to the location where the order was received. Sales by out-of-state vendors must be sourced to the location where the purchaser receives the tangible personal property. Sales of taxable services will be sourced to the location where the consumer receives the service, no matter where the service provider is located.

  Vendors that converted to destination sourcing and received compensation for making the change may qualify for compensation for converting back to origin sourcing. Vendors will not be subject to penalties relating to the sourcing change as long as the changes are completed by April 1, 2010. Beginning January 1, 2010, consumers who remit Ohio sales tax to the seller at the rate applicable where the order was received or where the consumer received the property will not be subject to any additional sales or use tax on the transaction.
 
Sales and Use Tax: Information Release ST 2009-03 , Ohio Department of Taxation, December 2009
 

CCH (cch.taxgroup.com) reports:

  The London International Financial Futures and Options Exchange (LIFFE), a regulated exchange of the United Kingdom, has been recognized by the IRS as a qualified board or exchange within the meaning of
Code Sec. 1256(g)(7)(C). A taxpayer may change to the Code Sec. 1256 mark-to-market accounting method for the first tax year during which the taxpayer holds LIFFE contract that was entered into on or after January 1, 2010. Although the change in treatment of LIFFE contracts is a change in method of accounting, taxpayers do not need to file Form 3115, Application for Change in Accounting Method, to make this change. The change is made on a cut-off basis and no Code Sec. 481(a) adjustment is required.

Rev. Rul. 2010-3, 2010FED ¶46,221

Other References:

 
Code Sec. 1256

  CCH Reference - 2009FED ¶31,107.021

  CCH Reference - 2009FED ¶31,107.70

  Tax Research Consultant

  CCH Reference - TRC SALES: 48,100

CCH (cch.taxgroup.com) reports:

  The IRS has further extended the application of the regulations described in Notice 2008-91, 2008-2 CB 1001 regarding the elective exclusion of certain obligations held by controlled foreign corporations (CFCs) from the definition of the term "obligation" for purposes of Code Sec. 956 (Notice 2010-12). Thus, these regulations will apply to the tax year of a CFC that immediately follows the last tax year of the CFC to which the regulations described in Notice 2008-91 could apply without regard to Notice 2010-12. Such regulations, however, will not apply to a tax year of a CFC beginning on or after January 1, 2011, and the IRS does not anticipate extending the application of these regulations to any additional periods. The IRS has also extended the application of Rev. Proc. 2008-26, 2008-1 CB 1014 to any day during calendar year 2010, for which it is relevant whether securities are readily marketable for purposes of Code Sec. 956(c)(2)(J) (in addition to any day during calendar years 2007, 2008 and 2009).

  In Notice 2008-91, the IRS announced that it intends to issue regulations under Code Sec. 956(e) that will allow a CFC to choose to exclude from the definition of the term "obligation" an obligation held by the CFC that would constitute an investment in U.S. property, provided the obligation is collected within 60 days from the time it is incurred. This exclusion will not apply, however, if the CFC holds for 180 or more calendar days during its tax year obligations that, without regard to the 60 day rule, would constitute an investment in U.S. property. Notice 2008-91 provides that the elective exclusion will apply for the first two tax years of a CFC ending after October 3, 2008. It will not, however, apply to tax years of a CFC beginning after December 31, 2009. The IRS subsequently issued Notice 2009-10, 2009-1 CB 419 to provide that the regulations described in Notice 2008-91 will also apply to the third consecutive tax year of a CFC, if any, that ends after October 3, 2008, and on or before December 31, 2009.

 
Rev. Proc. 2008-26 generally applies to determine whether securities are "readily marketable" for purposes of Code Sec. 956(c)(2)(J) for any day during calendar years 2007 or 2008, for which it is relevant whether securities are readily marketable for purposes of that provision. Notice 2009-10 subsequently extended that period to include any such day during calendar year 2009.

Notice 2010-12, 2010FED ¶46,220

Other References:

 
Code Sec. 956

  CCH Reference - 2009FED ¶28,576.023

  CCH Reference - 2009FED ¶28,576.35

  Tax Research Consultant

  CCH Reference - TRC INTLOUT: 9,256.15

CCH (cch.taxgroup.com) reports:

  The IRS has extended the temporary suspension of the rule disallowing the deduction of interest from certain applicable high yield discount obligations (AHYDOs). Generally, under Code Sec. 163(e)(5), a corporation may not deduct the "disqualified portion" of original issue discount (OID) on an AHYDO issued after July 10, 1989. However, the American Recovery and Reinvestment Act of 2009 (P.L. 111-5) suspended this rule for any AHYDO issued during the period beginning September 1, 2008, and ending December 31, 2009, in exchange for an obligation which is not an AHYDO from the same issuer. Pursuant to authority provided to it under the legislation, the Secretary of Treasury and IRS are extending the temporary suspension of the AHYDO rules to December 31, 2010, for any AHYDO that:

  --is issued after December 31, 2009, and before January 1, 2010, in exchange for an obligation which is not an AHYDO from the same issuer;

  --does not pay contingent interest;

  --is not issued to a related person;

  --the issue price of which is determined under the OID rules; and

  --would not otherwise be an AHYDO if its issue price were increased by the amount of any discharge of indebtedness income realized by the issuer upon the exchange.

Notice 2010-11, 2010FED ¶46,219

Other References:

 
Code Sec. 163

  CCH Reference - 2009FED ¶9303.12

  Tax Research Consultant

  CCH Reference - TRC ACCTNG: 36,262