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A Case of Nonacquiescence: I.R.S. Opposes Bartell Decision

A Case of Nonacquiescence: I.R.S. Opposes Bartell Decision

Tax-smart investors in U.S. real estate understand that the principal method of disposing real property is to participate in a two-party swap transaction with the ultimate purchaser or a three-party deferred swap through a qualified intermediary.  In Bartell v. Commr., the U.S. Tax Court allowed a replacement property to be purchased by an exchange accommodation title holder with whom it was parked for 17 months prior to its transfer.  However, the I.R.S. has issued a notice of nonacquiescence, advising taxpayers that it disagrees with the holding of the court.  Rusudan Shervashidze and Nina Krauthamer explain the facts in Bartell, the safe harbor that was published in Rev. Proc 2000-37, and the status of the facilitator as a beneficial owner for purposes of allowing tax deferral in the swap transaction.

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Eaton A.P.A. Cancellations Were an Abuse of I.R.S. Discretion

Eaton A.P.A. Cancellations Were an Abuse of I.R.S. Discretion

A recent U.S. Tax Court decision involving Eaton Corporation affirmed that the I.R.S. cannot arbitrarily circumvent administrative rules that are set down in revenue procedures and relied upon by the I.R.S. and a taxpayer.  As a result, the I.R.S. must reasonably exercise its discretion when seeking to terminate an advance pricing agreement with a taxpayer.  Michael Peggs looks at the process of obtaining an advanced pricing agreement and comments on the court’s decision.

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O.E.C.D. Issues Proposed Changes to Permanent Establishment Provisions Under Model Tax Convention

O.E.C.D. Issues Proposed Changes to Permanent Establishment Provisions Under Model Tax Convention

Earlier this year, the O.E.C.D. proposed amendments to Article 5 (Permanent Establishment) of the Model Tax Convention and Commentary.  The revisions eliminate loopholes that exist for commissionaire arrangements, artificial characterization of core activities as “preparatory,” avoidance of permanent establishment status through artificial fragmentation of contracts, and the use of not-so-independent agents.  Neha Rastogi, Beate Erwin, and Stanley C. Ruchelman explain the replacement provisions.

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Bilateral Investment Treaties: When Double Taxation Agreements Are Not Enough

Bilateral Investment Treaties: When Double Taxation Agreements Are Not Enough

The U.S. enters into bilateral investment treaties to protect and promote foreign investment.  Unlike double taxation agreements, which relate exclusively to tax matters, they are not usually seen as a defense mechanism when dealing with foreign tax authorities.  Interestingly, they are!   Rusudan Shervashidze and Nina Krauthamer explain.

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Tax 101: Deemed Annual Royalty on Outbound Transfers of I.P. to Foreign Corporations

Tax 101: Deemed Annual Royalty on Outbound Transfers of I.P. to Foreign Corporations

U.S. tax law contains provisions that attempt to discourage the outbound migration of intangible assets including specific rules that target transfers affected through corporate inversions.  Elizabeth V. Zanet and Stanley C. Ruchelman discuss the history and current standing of those provisions, while pointing out an alternative that is currently available to limit ongoing tax liability in the context of a start-up operation.

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