Daily Tax Update - January 17, 2017: IRS Releases Final Regulations on REITs Effecting General Utilities Doctrine Appeal

IRS Releases Final Regulations on REITs Effecting General Utilities Doctrine Repeal:  Today the Treasury Department and the IRS released final regulations (T.D. 9810) addressing the length of time during which a regulated investment company (RIC) or real estate investment trust (REIT) may be subject to corporate level tax on certain dispositions of property.  The final regulations adopt in part a set of proposed regulations and temporary regulations issued in June 2016.  However, the final regulations provide that REITs and RICs shall be subject to the same five-year gain recognition period as S corporations, rather than the 10-year gain recognition period in the temporary regulations.  

IRS Releases Proposed Changes to 401(k) Matching Contributions:  Today the Treasury Department and the IRS released proposed amendments to the definitions of qualified matching contributions (QMACs) and qualified nonelective contributions (QNECs) under regulations relating to certain qualified retirement plans that contain cash or deferred arrangements under section 401(k) or that provide for matching contributions or employee contributions under section 401(m).  Under the proposed regulations, employer contributions to a plan would be able to qualify as QMACs or QNECs if they satisfy applicable nonforfeitability and distribution requirements at the time they are allocated to participants’ accounts, but need not meet these requirements when they are contributed to the plan.  

Miscellaneous Guidance:
Revenue Ruling 2017-03 updates, for certain insurance contracts issued in 2016 and 2017, the prevailing state assumed interest rates that life insurance companies need in order to compute their life insurance reserves for federal tax purposes. 

Revenue Procedure 2017-13 provides updated safe harbor conditions under which a management contract does not result in private business use of property financed with governmental tax-exempt bonds under section 141(b) or cause the modified private business use test for property financed with qualified 501(c)(3) bonds under section 145(a)(2)(B) to be met.  The guidance superseded Revenue Procedure 2016-44, issued in August 2016.  

Notice 2017-15 provides special administrative procedures for allowing certain taxpayers and the executors of certain taxpayers’ estates to recalculate a taxpayer’s remaining applicable exclusion amount and remaining generation-skipping tax (GST) exemption to the extent an allocation of that exclusion or exemption was made to certain transfers made while the taxpayer was married to a person of the same sex.