Proposed carried interest regulations under section 1061 and a proposal for dealing with the cap on the state and local tax deduction are expected to be released in the coming weeks.
The proposed regs are among a slew of rules implementing the Tax Cuts and Jobs Act due for release by year-end or in January 2020, Treasury Assistant Secretary for Tax Policy David Kautter said November 13 at the American Institute of CPAs National Tax Conference in Washington.
Kautter also said final foreign tax credit regulations and final and proposed rules on the base erosion and antiabuse tax should be released in the next week and final rules under section 2010 regarding the increased basic exclusion amount for estate and gift taxes will likely be released in the next two weeks.
The final regs on the Opportunity Zone program and final and proposed regs on the section 163(j) interest expense deduction limitation could be out by the end of December, Kautter said, adding that the latter reg package “at this point is over 550 pages.”
TCJA guidance that Treasury hopes to get out by year-end or January 2020 includes:
final and proposed regs under section 267A addressing related-party amounts paid or accrued in hybrid transactions or by or to hybrid entities;
proposed regs under section 863(b) on the new inventory sourcing rule;
proposed regs dealing with the cap on the state and local tax deduction;
proposed regs under section 162(m) addressing the executive compensation deduction limitation;
proposed regs under section 512 on computing unrelated business taxable income for exempt organizations’ separate trades or businesses; and
proposed regs on section 3402 withholding.
According to Kautter, 60 percent of the TCJA’s provisions have been completely implemented from a guidance standpoint. “Within the next six weeks, we should have another 10 percent completed,” he said.
Reg Review Process 'Evolving'
Kautter also addressed the new tax regulatory review effort established by the April 2018 memorandum of agreement between Treasury and the Office of Management and Budget , saying the process is “still evolving.”
That agreement granted the OMB’s Office of Information and Regulatory Affairs greater authority to review and approve tax regs.
“So far it’s been a collaborative, collegial process,” Kautter said. “I will tell you [that] Treasury values OIRA’s views. It has added some time to the process, but it has worked, I think, fairly well and continues to get more efficient.”
Because of the new framework, Treasury’s tax economists have become much more involved in the reg writing process, Kautter said.
“They have a major role in developing the preamble and the economic analysis that goes along with tax regulations,” Kautter said.