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This Week's Internal Revenue Bulletin

JAN. 13, 2020

2020-3 IRB 1

DATED JAN. 13, 2020
DOCUMENT ATTRIBUTES
  • Institutional Authors
    Internal Revenue Service
  • Subject Area/Tax Topics
  • Jurisdictions
  • Tax Analysts Document Number
    2020-1240
  • Tax Analysts Electronic Citation
    2020 TNTG 8-19
    2020 TNTF 8-34
Citations: 2020-3 IRB 1

HIGHLIGHTS OF THIS ISSUE

These synopses are intended only as aids to the reader in identifying the subject matter covered. They may not be relied upon as authoritative interpretations.

EMPLOYEE PLANS

REV. RUL. 2020-2, page 298. This revenue ruling provides tables of covered compensation under § 401(l)(5)(E) of the Internal Revenue Code and the Income Tax Regulations thereunder, effective January 1, 2020.

EMPLOYMENT TAX

NOTICE 2020-3, page 330. The notice provides guidance for the 2020 calendar year regarding withholding from periodic payments for pensions, annuities, and certain other deferred income under section 3405(a), including the rules for withholding from periodic payments under section 3405(a) when no withholding certificate has been furnished.

INCOME TAX

NOTICE 2020-2, page 327. This Notice announces that Treasury and the IRS intend to amend the section 871(m) regulations to delay the effective/applicability date of certain rules in those final regulations and extends the phase-in period provided in Notice 2018-72, 2018-40 I.R.B. 522, for certain provisions of the section 871(m) regulations.

REG-107431-19, page 332. REG-107431-19 provides proposed amendments to the regulations under sections 162, 164, and 170 of the Internal Revenue Code (Code). First, the proposed amendments update the regulations under section 162 to reflect current law regarding the application of section 162 to a taxpayer that makes a payment or transfer to an entity described in section 170(c) for a business purpose. Second, the proposed amendments provide safe harbors under section 162 to provide certainty with respect to the treatment of payments made by business entities to an entity described in section 170(c). Third, the proposed amendments provide a safe harbor under section 164 for payments made to an entity described in section 170(c) by individuals who itemize deductions and receive or expect to receive a state or local tax credit in return. Fourth, the proposed amendments update the regulations under section 170 to reflect past guidance and case law regarding the application of the quid pro quo principle under section 170 to benefits received or expected to be received by a donor from a third party.

REG-122180-18, page 342. Section 162(m) generally limits the otherwise allowable deduction for compensation paid with respect to a covered employee of a publicly held corporation to no more than $1,000,000 per year. The proposed regulations propose guidance on the application of §162(m), as amended by section 13601 of Tax Cuts and Jobs Act (the Act). The Act made significant amendments to §162(m), and provided a transition rule applicable to certain outstanding arrangements (commonly referred to as the grandfather rule). The proposed regulations propose guidance on the amendments made by the Act to the definitions of publicly held corporation, covered employee, and applicable employee remuneration. Additionally, the proposed regulations propose guidance on the operation of the grandfather rule.

REV. RUL. 2020-1, page 296. Federal rates; adjusted federal rates; adjusted federal long-term rate, the long-term exempt rate, and the blended annual rate. For purposes of sections 382, 1274, 1288, 7872 and other sections of the Code, tables set forth the rates for January 2020.

T.D. 9887, page 302. The regulations provide guidance to nonresident alien individuals and foreign corporations that hold certain financial products providing for payments that are contingent upon or determined by reference to U.S. source dividend payments. The regulations also provides guidance to withholding agents that are responsible for withholding U.S. tax with respect to a dividend equivalent, as well as certain other parties to section 871(m) transactions and their agents. Specifically, the regulations provide guidance regarding (1) the definition of a broker for purposes of section 871(m), (2) how to calculate the delta of certain options listed on a foreign regulated exchange, and (3) who must determine whether a transaction is a section 871(m) transaction when multiple brokers or dealers are involved in the transaction.

T.D. 9888, page 306. The final regulations provide guidance in determining whether a corporation is a predecessor or successor of a distributing or controlled corporation for purposes of the exception under section 355(e) to the nonrecognition treatment afforded qualifying distributions. The final regulations also provide certain limitations on the recognition of gain in certain cases involving a predecessor of a distributing corporation.

DOCUMENT ATTRIBUTES
  • Institutional Authors
    Internal Revenue Service
  • Subject Area/Tax Topics
  • Jurisdictions
  • Tax Analysts Document Number
    2020-1240
  • Tax Analysts Electronic Citation
    2020 TNTG 8-19
    2020 TNTF 8-34
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