Daily Tax Update - December 21, 2012: President Obama: "We Have to Find Common Ground"

PRESIDENT OBAMA: “WE HAVE TO FIND COMMON GROUND”:  In a press conference today, President Obama said that he is "still willing and ready to get a comprehensive package" on the fiscal cliff.  The President said, "Let’s agree on what we already agree on."  The President said that there is "no reason not to protect Americans from a tax hike."  Obama added, "Nobody gets 100% of what they want, everyone has to give a little bit. . . . We have to find common ground."  Obama expressed optimism that an agreement could be reached stating, "I still think we can get it done."  

  • In remarks earlier today, House Speaker John Boehner said, "While we may have not been able to get the votes last night to avert 99.81% of the tax increases  . . .  they weren’t taking that out on me.  They were dealing with the perception that somebody might accuse them of raising taxes.  Listen, I’m proud of our members.  They do a great job on behalf of their constituents and, frankly, a great job on behalf of our country."  Boehner continued, "The problem that I had was that time was running short.  There was a perception created that that vote last night was going to raise taxes.  I disagree with that characterization of the bill, but that impression was out there.  And we had a number of our members who just really didn’t want to be perceived as having raised taxes.  That was the real issue."  Boehner added, "We'll continue to work with our colleagues in the House and the Senate on a plan that protects families and small businesses from the fiscal cliff."
  • The House and Senate are expected to return on December 27th.  Boehner said today, "What Mr. Cantor outlined last night is that the House would come back if needed, and we're prepared to come back if needed."

FINAL REGULATIONS RELEASED ON THE USE OF CONTROLLED CORPORATIONS TO AVOID THE APPLICATION OF SECTION 304:  Treasury and the IRS have issued final regulations (T.D. 9606) that address sales of stock between related corporations.  These regulations, which adopt proposed regulations (REG-132232-08) issued in December 2009, apply to sales of stock between related corporations that are recharacterized as contributions and redemptions, but are structured primarily to redesignate the issuing corporation or the acquiring corporation.  The final regulations are intended to prevent the avoidance of the application of section 304 to a controlled corporation. 

  • Specifically, the final regulations contain special rules for related corporations to determine the amount of a property distribution that constitutes a dividend (and the source thereof) under section 304(b)(2). 
  • The final regulations apply to acquisitions of stock occurring on or after December 29, 2009.
  • The regulations can be accessed here.
  • For additional information, contact Gregory N. Kidder - gkidder@steptoe.com

FINANCE COMMITTEE APPROVES TAX COURT NOMINEES:  Today, the Senate Finance Committee favorably reported the nominations of Ronald Buch and Albert Lauber to serve as judges on the United States Tax Court.  Chairman Max Baucus said, "Both of these nominees have decades of experience and will bring a wealth of knowledge to the Tax Court."  Baucus added, "I am confident that Mr. Buch and Mr. Lauber will serve taxpayers well and ensure our tax laws are administered fairly."

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.