Update on IRS Voluntary Disclosures... [ read ]
In a previous blog post, we discussed how and when to make a voluntary disclosure to the IRS using the revised voluntary disclosure guidelines announced by the IRS in November 2018. In April 2020, the IRS quietly updated Form 14457, Voluntary Disclosure Practice Preclearance Request and Application and its instructions. The changes to the form and instructions answer some of the outstanding questions but also raise new questions. For example, while the instructions clearly state that a disclosure will not guarantee immunity from prosecution, they also state multiple times that the practice provides a way to "avoid potential criminal prosecution."
The Texas Supreme Court Holds that the Sale of Military Aircraft to the U.S. Government for Foreign Buyers Could not be Sourced to Texas for Franchise Tax Purposes... [ read ]
In a recent decision involving the apportionment factor for Texas franchise tax purposes, the Texas Supreme Court held that the sale of certain military aircraft to the U.S. Government for ultimate delivery to foreign buyers could not be sourced to Texas, even though legal title and possession transferred in Texas, where the U.S. Government's involvement was statutorily required under federal law. In so holding, the Court disclaimed deciding whether tangible personal property must be sold to a buyer located in Texas or simply delivered to a point in Texas before the sale can be sourced to Texas. See Lockheed Martin Corp. v. Hegar, 2020 WL 2089741 (Tex. 2020). As discussed below, the decision is potentially significant both with respect to what it holds and also what it expressly disclaims to hold.
Debt Relief: Breaking Down the Tax Aspects of Covid-19's Economic Impact – Part I.... [ read ]
This is the first in a series of blogs which will address various tax aspects of loan modification, debt relief, restructuring, bankruptcy, and other topics that will likely be at the forefront of the legal landscape in the near future as a result of Covid-19. The posts in this series, while not exhaustive of all topics, will provide guidance on important practice points and raise several issues taxpayers and practitioners should be aware of. The first topic in the series, cancellation of indebtedness, illustrates the often-unexpected tax consequences accompanying relief from indebtedness.
EXPENSES PAID WITH FORGIVEN PAYMENT PROTECTION PLAN (PPP) LOAN PROCEEDS ARE NOT DEDUCTIBLE... [ read ]
The CARES ACT added the Paycheck Protection Plan program, which provides for a loan on favorable terms to qualifying small businesses to pay permitted expenses. These expenses are limited to payroll costs, mortgage interest, rent and utilities --all as defined in the statute and in SBA Guidance and FAQs.
The Texas Supreme Court Denies a Cost of Goods Sold Deduction for Costs Associated with Picking up and Delivering Heavy Construction Rental Equipment... [ read ]
In one of three recent decisions issued by the Texas Supreme Court involving the Texas franchise tax, the Court held that certain costs associated with the rental of heavy construction equipment could not be included in the cost of goods sold deduction.
The Texas Supreme Court Denies a Cost of Goods Sold Deduction to a Movie Theater Company in a Texas Franchise Tax Case... [ read ]
In the recent case of American Multi-Cinema, Inc. v. Hegar, Cause No. 17-0464 (Tex. Apr. 3, 2020), the Texas Supreme Court held that a taxpayer engaged in exhibiting movies in movie theaters could not claim a cost of goods sold for the costs it incurred in exhibiting its movies. This case, which has been closely monitored by taxpayers and practitioners alike, addresses important questions regarding the definition of "tangible personal property" for cost of goods sold purposes. The Court ultimately concluded that American Multi-Cinema, Inc. ("AMC") did not qualify for the cost of goods sold deduction because it did not sell tangible personal property.
IRS Provides Partners and Partnership Tax Professionals Relief in Rev. Proc. 2020-23... [ read ]
For those partnerships who had not elected early application or validly elected out, the 2018 tax year was the first year in which the new partnership audit rules, enacted by the Bipartisan Budget Act of 2015 (the "BBA"), took effect.
COVID-19 – EXCUSAL FROM PERFORMANCE UNDER THE TERMS OF A CONTRACT... [ read ]
Businesses across Texas are facing many uncertainties with several counties and municipalities ordering citizens to either "shelter–in–place" or "stay–at–home" and banning gatherings of more than 10 people, all in an attempt to slow the spread of the novel coronavirus, also known as COVID-19. As a result, many non–essential businesses whose employees are unable to work remotely and/or scheduled events with attendance of more than 10 people being cancelled or delayed are expressing their concern about little to no incoming revenue. Such business owners are requesting guidance as to whether their performance will be excused pursuant to the terms of their commercial contracts.
The Texas Supreme Court Provides Important Guidance in Construing Two Statutory Provisions Dealing with Real Property Work for Texas Franchise Tax Purposes... [ read ]
In one of three recent cases addressing the Texas franchise tax, the Texas Supreme Court held that a company engaged in performing work on offshore oil-and-gas drilling rigs could not claim a cost of goods sold deduction with respect to certain costs incurred with that work, but could exclude payments to subcontractors from total revenue.
TAX STIMULUS PROVISIONS OF THE CARES ACT... [ read ]
In addition to the PPP loan program, the CARES Act has implemented various tax stimulus provisions for individuals and businesses, including retroactive temporary deferral, or modification of certain loss deduction limitations added by the Tax Cuts and Jobs Act.
