(Modified to add commentary on applicability date of the safe harbor)

In Revenue Procedure 2019-12 the IRS released a set of safe harbor rules that apply to C corporations and certain passthrough entities that receive a state tax credit for amounts paid to organizations qualified under §170(c).

The procedure was issued in response to proposed regulations issued in 2018 that will apply to charitable contributions made by individuals after August 27, 2018. In such cases, an individual must reduce any charitable contribution claimed by any state tax credit received for making the contribution exceeds 15% of the contribution amount.

In the case of Connell v. Commissioner, TC Memo 2018-213, the taxpayer (who was employed by Merrill Lynch) attempted to classify the amount of a loan that was forgiven as part of a Financial Industry Regulatory Authority’s (FINRA) decision in a dispute he had with Merrill Lynch as a capital gain.

The taxpayer had been a financial adviser since 1974.  In 2009 when he discovered that Smith Barney, with whom he was then associated, was going to be acquired by Morgan Stanley, he decided to look for other employment opportunities.  The best offer he received was from Merrill Lynch which he accepted.

In Revenue Procedure 2019-08 the IRS gives information on the following items following the enactment of the Tax Cuts and Jobs Act:

• Qualified real property under IRC §179;

• Alternative depreciation system (ADS) depreciation of real property with the new 30 and 40 year lives; and

• Handling the transition to ADS depreciation for certain property of electing farming and electing real property businesses.

In Notice 2019-6 the IRS announced its intention to issue proposed regulations to deal with “special enforcement matters” under the centralized partnership audit regime (CPAR).  Special enforcement matters are defined at IRC §6241(11), a provision added by the Consolidated Appropriations Act of 2018 as part of the technical corrections to the CPAR partnership audit regime that was created by the Bipartisan Budget Act of 2015 and which will first be effective for partnership tax years beginning in 2018.

The Joint Committee on Taxation has released the General Explanation Of Public Law 115-97, better known as the Blue Book on TCJA (JCS-1-18).

The 457 page document contains the staff’s explanation of the provisions in last year’s Tax Cuts and Jobs Act.  Blue Books for prior laws have often been referenced and consulted by the IRS in developing guidance, as well as being referred to by advisers when dealing with matters not yet covered by IRS guidance.

The IRS issued a news release (IR-2018-254) that states it gives additional information on the excess business loss rules of IRC §461(l) and net operating losses given the changes made in the Tax Cuts and Jobs Act (TCJA).

The IRS has now sent final regulations under IRC §199A (RIN 1545-BO71) and a new set of proposed regulations (RIN 1545-BP12) under that section related to REIT dividends and registered investment companies (mutual funds) to the Office of Information and Regulatory Affairs (OIRA) of the Office of Management and Budget for review.  The proposed regulations were sent to OIRA on December 13, 2018, while the final regulations followed on December 14, 2018.

Neither set of regulations are marked as economically significant, so OIRA has 45 days to complete the review of the regulations.  That review must be completed before the regulations can be released.

In Notice 2018-99 the IRS has provided guidance to employers and tax-exempt organizations attempting to deal with provisions in the Tax Cuts and Jobs Act dealing with employer-provided parking.

As the Notice explains:

As amended by the Act, § 274(a)(4) generally disallows a deduction for expenses with respect to QTFs provided by taxpayers to their employees, and § 512(a)(7) generally provides that a tax-exempt organization’s UBTI is increased by the amount of the QTF expense that is nondeductible under § 274.

The notice provides guidance on computing the amount of disallowed deduction (for taxable entities) and UBTI (for tax-exempt organizations) to be recognized under this provision.