Daily Tax Update - October 6, 2008

THE DAILY TAX UPDATE WILL BE PUBLISHED ON A PERIODIC BASIS UNTIL CONGRESS RETURNS JANUARY 4, 2009.

IRS MODIFIES SECTION 956 GUIDANCE TO FACILITATE LIQUIDITY:  Acknowledging the current liquidity crisis, the IRS announced in Notice 2008-91 that it would issue regulations to permit a controlled foreign corporation to exclude from treatment as “an investment in US property” an obligation that is collected within 60 days (rather than the 30 days provided for in earlier guidance). This treatment is not available if the controlled foreign corporation holds the obligation for 180 days or more during its taxable year (60 days or more in earlier guidance). 

• Where a controlled foreign corporation invests in US property, its US shareholders are generally subject to tax on such investment.
• The relief provided by Notice 2008-91 is available only for the first two taxable years of a foreign corporation ending after October 3, 2008.
• For additional information, contact Philip R. West - pwest@steptoe.com or Stanley Smilack - ssmilack@steptoe.com
• The notice can be accessed here. 

INTERNAL REVENUE SERVICE - CIRCULAR 230 DISCLOSURE:
As provided for in Treasury regulations, advice (if any) relating to federal taxes that is contained in this communication (including attachments) is not intended or written to be used, and cannot be used, for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any plan or arrangement addressed herein.

STEPTOE & JOHNSON LLP - TAX PRACTICE
Steptoe & Johnson LLP has one of the largest and most diverse law firm tax practices in the country. The practice covers the entire spectrum of federal taxation, including representation of businesses before the Congress, Treasury and the national office of the IRS; transactional planning for domestic and multinational corporations; complex audit and controversy work for corporations and other business interests contesting IRS adjustments; litigation before the Tax Court, Court of Federal Claims, district courts, courts of appeals and the Supreme Court. The firm's tax practice also encompasses all aspects of employee benefits (ERISA), executive compensation, tax-exempt organizations and charitable giving. Steptoe has an extensive state and local tax practice, representing an array of business clients on complex sales and use tax, corporate income tax and property tax matters, both advising those clients and handling audits, administrative appeals, and litigation for them. Read more information on Steptoe's tax practice.

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