Daily Tax Update - August 14, 2014: Treasury and IRS Issue Regulations on MACRS Property Gains and Losses

Treasury and IRS Issue Regulations on MACRS Property Gains and Losses:  The Treasury Department and IRS issued final regulations under Section 168 concerning the disposition of Modified Accelerated Cost Recovery System (MACRS) property.  The final regulations, effective August 18, 2014, adopt proposed regulations issued in September 2013 with some changes.  The final regulations provide rules for determining the unadjusted depreciable basis of a disposed asset, or a disposed portion of an asset, in a general or multiple asset account.  Additionally, the final regulations specify the manner of making specified disposition elections for assets included in a general asset account subject to Section 280B.  

Senator Schumer Releases Anti-Inversion Plan:  Senate Finance Committee member Chuck Schumer (D-NY) released his proposal to target the benefits of corporate inversion transactions.  Schumer proposes to repeal the Section 163(j) debt-to-equity safe harbor provision and reduce to 25 percent the maximum amount a US entity’s net interest paid to a related party can exceed its adjusted taxable income before it is considered nondeductible.  Schumer also proposes to repeal the carryforward period for both excess limitation and disallowed interest expenses.  The plan may become part of a larger package of anti-inversion legislation.