Daily Tax Update - March 2, 2016: Treasury, IRS Issue Final, Temporary, and Proposed Regulations on Utility Allowances Submetering

Treasury, IRS Issue Final, Temporary, and Proposed Regulations on Utility Allowances Submetering:  Today, Treasury and the IRS issued final and temporary regulations (TD 9755) under section 42 that amend the utility allowance regulations concerning the low-income housing credit.  The text of the temporary regulations serves as the text of concurrently issued proposed regulations (REG-123867-14).  The final regulations clarify the circumstances in which utility costs paid by a tenant based on actual consumption in a submetered rent-restricted unit are treated as paid by the tenant directly to the utility company.  The temporary regulations extend the principles of these submetering rules to energy that the building owner provides to tenants after having acquired it directly from renewable sources.  Qualification for this submetering treatment, however, depends on the charges to the tenants for this energy being comparable to local utility rates.  To the extent that tenants consume this energy, charges by the building owner must not exceed the rates that the local utility company would have charged the tenants if such tenants had instead acquired energy from that company.  The final and temporary regulations are effective March 3.  Comments on the proposed regulations and requests for a public hearing must be received by May 2.

Treasury, IRS Issue Proposed and Temporary Regulations on Estate Basis Reporting:  Today, Treasury and the IRS issued proposed regulations (REG-127923-15) that provide guidance regarding the requirement that a recipient’s basis in certain property acquired from a decedent be consistent with the value of the property as finally determined for federal estate tax purposes.  The proposed regulations also provide guidance on the reporting requirements for executors or other persons required to file federal estate tax returns.  Contemporaneously issued temporary regulations (TD 9757) provide transition relief to executors and other persons required to file or furnish certain statements.  The text of the temporary regulations also serves as the text of the proposed regulations regarding the transition relief.  Comments on the proposed regulations and requests for a public hearing must be received by June 2.  The temporary regulations are effective March 4.