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F.B.A.R.’s — What You Need to Know

F.B.A.R.’s — What You Need to Know

April 15 is almost here, and while most people know this date as the filing deadline for individual tax returns, it is important to another filing requirement: the Report of Foreign Bank and Financial Accounts (“F.B.A.R.”).  Although the form has been around since the 1970’s, many people continue to profess ignorance of  its existence.  Others are simply confused about the requirements.  A recent Federal case illustrates the perils of failing to file a required F.B.A.R.  Rusudan Shervashidze and Nina Krauthamer explain that penalties are high, and courts are skeptical about claims of ignorance of the law, especially when taxpayers have accumulated several million dollars placed in an offshore account.

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Who’s Got the B.E.A.T.? Special Treatment for Certain Expenses and Industries

Who’s Got the B.E.A.T.? Special Treatment for Certain Expenses and Industries

Code §59A imposes tax on U.S. corporations with substantial gross receipts when base erosion payments to related entities significantly reduce regular corporate income tax.  The new tax is known as the base erosion and anti-abuse tax (“B.E.A.T.”).  In the second of a two-part series, Rusudan Shervashidze and Stanley C. Ruchelman address (i) the coordination of two sets of limitations on deductions when payments are subject to B.E.A.T. and the Code §163(j) limitation on business interest expense deductions, (ii) the computation of modified taxable income in years when an N.O.L. carryover can reduce taxable income, (iii) application of B.E.A.T. to partnerships and their partners, and (iv) the application of the B.E.A.T. to banks and insurance companies. 

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Who’s Got the B.E.A.T.? A Playbook for Determining Applicable Taxpayers and Payments

   Who’s Got the B.E.A.T.? A Playbook for Determining Applicable Taxpayers and Payments

Code §59A imposes tax on U.S. corporations with substantial gross receipts when base erosion payments to related entities significantly reduce regular corporate income tax. The new tax is known as the base erosion and anti-abuse tax (“B.E.A.T.”). In late December 2019, the I.R.S. proposed regulations that provide guidance for affected taxpayers. The proposed regulations provide a playbook for making required computations including (i) the gross receipts test to determine if the taxpayer meets the $500 million gross receipts requirement, (ii) the base erosion percentage test, (iii) how to apply the tests when a taxpayer is member of an Aggregate Group having members with differing year-ends, (iv) various computations to determine whether a non-cash transaction is considered to be a payment to a related party outside the U.S. or is outside the scope of the B.E.A.T., and (v) other exceptions from the B.E.A.T. In the first of a multi-part series, Rusudan Shervashidze and Stanley C. Ruchelman tell all.

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Attorney-Client Privilege Extends to Accountants Retained by Legal Counsel

Attorney-Client Privilege Extends to Accountants Retained by Legal Counsel

Over time, the attorney-client privilege, which protects information disclosed by a client, has been extended to include certain client communications to accountants retained by legal counsel to provide input regarding the application of accounting rules. However, the privilege does not apply when a client retains the accountant prepare tax returns. In U.S. v. Adams, the I.R.S. challenged the extension of the privilege to an accountant who provided advice to the client’s defense counsel and later prepared U.S. tax returns for the client. The decision likely satisfies neither the I.R.S. nor the taxpayer. Rusudan Shervashidze and Stanley C. Ruchelman explain the I.R.S. challenge and the Solomon-like solution reached by the court.

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Insights Vol. 6 No. 1: Updates & Other Tidbits

Insights Vol. 6 No. 1: Updates & Other Tidbits

This month, Rusudan Shervashidze and Stanley C. Ruchelman look at several interesting items, including (i) the publication of draft legislation by the Crown Dependencies of Guernsey, Jersey, and Isle of Man calling for the existence of economic substance for resident companies engaged in certain businesses and defining what that means, (ii) the denial of benefits incident to foreign earned income for a military contractor in Afghanistan who maintained a place of abode in the U.S., (iii) an increase in fees charged by the I.R.S. to issue residency certificates, (iv) the establishment of a working group to combat transnational tax crime through increased enforcement collaboration among tax authorities in several countries, and (v) changes to China’s residency rules and the sharing of taxpayer financial information under C.R.S. 

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