Daily Tax Update - November 7, 2014: IRS Issues Final Regulations on Allocation of Earnings and Profits in Tax-Free Transfers

IRS Issues Final Regulations on Allocation of Earnings and Profits in Tax-Free Transfers:  Today, the IRS and Treasury issued final regulations under Sections 312 and 381.  The final regulations under Section 312 clarify current regulations regarding the allocation of earnings and profits in tax-free transfers from one corporation to another.  The final regulations under Section 381 modify the definition of an acquiring corporation with regard to certain acquisitions of assets.  These regulations finalize without substantive change proposed regulations under Sections 312 and 381.

Supreme Court to Hear Health Care Tax Credit Case:  The Supreme Court granted certiorari in King v. Burwell, a case addressing the federal government’s subsidies to individual buyers of health insurance.  In King, the Fourth Circuit upheld the federal government’s authority to provide consumers tax subsidies in health insurance exchanges not run by the states.  In Halbig v. Burwell, the DC Circuit found that the government lacked such authority, but agreed to rehear the case en banc.