Overview
Treasury and the IRS Issue Additional Guidance for Computing Transition Tax on Foreign Earnings: Today, the Treasury Department and the IRS issued Notice 2018-26, providing additional guidance for computing the “transition tax” on the untaxed foreign earnings of foreign subsidiaries of US companies under the Tax Cuts and Jobs Act. The notice describes regulations to be issued, including rules intended to prevent the avoidance of section 965, rules and procedures relating to certain special elections under section 965, and guidance on the reporting and payment of the transition tax. The notice also provides relief to taxpayers from certain estimated tax requirements and penalties arising from the enactment of the transition tax and the change to existing stock attribution rules in P.L. 115-97. See also news release IR-2018-79.
Treasury and the IRS Issue Section 163(j) Guidance: Today, the Treasury Department and the IRS issued Notice 2018-28, announcing their intent to issue proposed regulations providing guidance regarding section 163(j), as amended by the Tax Cuts and Jobs Act (the Act). Section 163(j) was amended by the Act to provide new rules limiting the deduction of business interest expense for taxable years beginning after December 31, 2017. The notice also provides interim guidance relating to the treatment of “disqualified interest” from the last taxable year beginning before January 1, 2018; C corporation business interest expense; the application of section 163(j) to consolidated groups; the impact of section 163(j) on earnings and profits; and business interest income and floor plan financing of partnerships, partners, S corporations and S corporation shareholders; pending the issuance of regulations. See also news release IR-2018-82.
Treasury and the IRS Issue Regulations Under New Section 1446(f): Today, the Treasury Department and the IRS issued Notice 2018-29, announcing their intent to issue future regulations under new section 1446(f) regarding the withholding on the transfer of non-publicly traded partnership interests under the Tax Cuts and Job Act. The notice also provides interim guidance pending the issuance of regulations. Additionally, the notice suspends secondary partnership level withholding requirements in certain circumstances. The rules in the notice that modify or suspend withholding under section 1446(f) do not affect the transferor’s tax liability under section 864(c)(8). See also news release IR-2018-81.
IRS Releases Publication Regarding Calculating Tax Withholding and Estimated Tax: On April 1, the IRS issued the 2018 edition of Publication 505, “Tax Withholding and Estimated Tax,” for use by employees to determine how much income an employer should withhold for tax payments. Form W-4 was also updated to reflect the changes under the Tax Cuts and Jobs Act.