Daily Tax Update - July 7, 2016: IRS Issues Final Regulations on Accounting for Gain and Loss for Money Market Funds

IRS Issues Final Regulations on Accounting for Gain and Loss for Money Market Funds:  Today, the IRS issued final regulations describing a simplified method of accounting for gain and loss on shares in money market funds (MMFs) that are affected by certain SEC regulations.  These SEC regulations allow no more than minimal fluctuations in the MMF’s net asset value (NAV) per share.  The final regulations allow a taxpayer’s gain or loss on shares in an MMF to be based on the change in the aggregate value of the taxpayer’s shares and on the net amount of the purchases and redemptions for both stable and floating-NAV MMFs, broadening the rules from the proposed regulations which only allowed the NAV method for floating-NAV MMFs.  These regulations are issued under sections 446 and 6045 and relate to proposed regulations issued on July 28, 2014. 

IRS Issues Guidance on Changing Net Asset Value Accounting Method:  Today, the IRS issued Revenue Procedure 2016-39 which allows for automatic consent to change to or from the NAV method of accounting for MMFs outlined in the final regulations under section 446 discussed above. 

Congressional Taxwriters Meet With Treasury to Discuss Proposed Section 385 Regulations:  Yesterday, members of the Senate Finance Committee, the House Ways and Means Committee, and the Joint Committee on Taxation met with Treasury officials to discuss the controversial debt-equity proposed regulations issued under section 385.  House Ways and Means Chairman Kevin Brady issued a statement after the meeting citing concerns that the proposed rules could reduce companies’ domestic investment.