Daily Tax Update - October 31, 2014: IRS Issues Proposed Regulations on Partnership Hot Asset Distributions

IRS Issues Proposed Regulations on Partnership Hot Asset Distributions:  Today, the Treasury and IRS issued proposed regulations under Section 751(b) that prescribe how a partner should measure its interest in a partnership’s unrealized receivables and inventory items.  The proposed regulations also provide guidance regarding the tax consequences of a distribution that causes a reduction in that interest.  The proposed regulations adopt many of the principles described in Notice 2006-14, including a hypothetical sale approach to measuring a partner’s interest in Section 751 property for the purpose of determining whether a distribution reduces a partner’s interest in the property.

EU Commission Proposes New VAT System:  The European Commission announced yesterday that it is assessing ideas on how to create a simpler, more effective, and more fraud-proof VAT system in the EU.  The Commission set out five options for shaping the future VAT regime with a focus on business-to-business supplies of goods.  The Commission is now undertaking an in-depth assessment to determine the impact of each option with conclusions expected in Spring 2015.