SubChapter M Tax: Foreign withholding issues - Deloitte | France Tax Alert - 8 July 2010 | International Tax: "Deloitte | France Tax Alert - 8 July 2010 | International Tax: 'The French Administrative Lower Court of Paris ruled on 22 April 2010 that the withholding tax levied on French-source dividends paid to an Irish UCIT violated the free movement of capital principle in the Treaty of the Functioning of the EU and EEA. The French tax authorities have four months to lodge an appeal against the decision (until August 2010), although they have not yet done so.
Under French law, dividends paid by a French company to a non-French UCIT are subject to a 25% withholding tax, whereas dividends paid by a French company to a French UCIT are exempt from taxation in France (i.e. no withholding tax and no corporate income tax at the level of the UCIT). In addition, the French tax authorities take the position that tax treaties do not apply to UCITs, unless specific provisions are included in a treaty (see, for example, France’s treaties with Germany, Spain and Sweden).'"
Thursday, July 29, 2010
ICI - 2010 Tax & Accounting Conference
ICI - 2010 Tax & Accounting Conference: "Tax and Accounting Conference
September 26–29, 2010
Phoenix, AZ
For the latest information on tax, accounting, and regulatory developments, don't miss the Investment Company Institute's 2010 Tax and Accounting Conference at the JW Marriott Desert Ridge in Phoenix, Arizona. A welcoming reception will take place on the evening of Sunday, September 26. Conference sessions are scheduled for Monday, September 27 through Wednesday, September 29."
September 26–29, 2010
Phoenix, AZ
For the latest information on tax, accounting, and regulatory developments, don't miss the Investment Company Institute's 2010 Tax and Accounting Conference at the JW Marriott Desert Ridge in Phoenix, Arizona. A welcoming reception will take place on the evening of Sunday, September 26. Conference sessions are scheduled for Monday, September 27 through Wednesday, September 29."
SubChapter M Tax: irs private letter ruling 201025031 - qualifying income under 851 from a CFC
SubChapter M Tax: irs private letter ruling 201025031 - qualifying income under 851 from a CFC: "This is in response to your letter dated August 9, 2009, requesting a ruling that (1) income and gain arising from the commodities-linked notes described below constitute qualifying income to Fund under section 851(b)(2) of the Internal Revenue Code of 1986, as amended (the “Code”) and (2) income earned from Fund’s investment in a wholly-owned subsidiary (Subsidiary) that is a controlled foreign corporation (CFC) under section 957(a) constitutes qualifying income to Fund under section 851(b)(2)."
Taxation of Real Estate Investment Trusts: Retroactive QEF election made by REIT - IRS Private Letter Ruling 201029016
Taxation of Real Estate Investment Trusts: Retroactive QEF election made by REIT - IRS Private Letter Ruling 201029016: "This is in response to your letter received by our office on November 9, 2009, requesting the consent of the Commissioner of the Internal Revenue Service to make a retroactive qualified electing fund ('QEF') election under section 1295(b) of the Internal Revenue Code ('Code') and Treas. Reg. �1.1295-3(f) with respect to your investment in FC.
The rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party. While this office has not verified any of the material submitted in support of the request for rulings, it is subject to verification on examination.
FACTS
Taxpayer is a State X corporation. Taxpayer and Company A, a Real Estate Investment Trust (Taxpayer’s indirect shareholder), both made an election to treat Taxpayer as a taxable REIT subsidiary effective Date 1. Company B (Taxpayer’s majority direct shareholder) is an operating partnership owned primarily by Company A. Taxpayer is a calendar year taxpayer and uses the accrual method of accounting."
The rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party. While this office has not verified any of the material submitted in support of the request for rulings, it is subject to verification on examination.
FACTS
Taxpayer is a State X corporation. Taxpayer and Company A, a Real Estate Investment Trust (Taxpayer’s indirect shareholder), both made an election to treat Taxpayer as a taxable REIT subsidiary effective Date 1. Company B (Taxpayer’s majority direct shareholder) is an operating partnership owned primarily by Company A. Taxpayer is a calendar year taxpayer and uses the accrual method of accounting."
Taxation of Real Estate Investment Trusts: State Tax Matters
Taxation of Real Estate Investment Trusts: State Tax Matters: "Effective for tax years ending on or after July 1, 2010, new law generally requires a defined captive real estate investment trust (REIT) to add back its federal dividends paid deduction, as well as requires a “captive REIT affiliated group” to file its Tennessee franchise/excise tax return on a combined basis. A captive REIT is generally defined as a federal income tax REIT under Internal Revenue Code Sec. 856(c)(1) that is not publicly traded and is 80% or more owned directly or indirectly by a single entity or individual. A captive REIT affiliated group includes any entity that is greater than 50% owned (directly or indirectly) by a captive REIT; although the law provides an exception for captive REITs owned directly or indirectly by a bank or bank holding company or a public REIT. Also, the federal dividends paid deduction add-back requirement does not apply to a captive REIT that is owned, directly or indirectly, by a bank or a bank holding company or a public REIT."
SubChapter K Tax: Qualifying Income of a Publicly Traded Partnership under IRC 7704 - IRS Private Letter Ruling 201027003
SubChapter K Tax: Qualifying Income of a Publicly Traded Partnership under IRC 7704 - IRS Private Letter Ruling 201027003: "This letter responds to a letter from your authorized representative dated February 16, 2010 submitted on behalf of X requesting a ruling under the publicly traded partnership rules of �7704 of the Internal Revenue Code.
X was organized as a limited partnership under the laws of State. It is a publicly traded partnership within the meaning of � 7704(b). X is engaged through its operating partnership, Y, and through Y's subsidiaries (hereinafter, any references to X include a reference to Y and Y's subsidiaries), in a variety of activities, including the marine transportation of crude oil, refined petroleum products and other products for a variety of charterers, including major and independent oil and gas refining companies and petroleum marketing companies. X currently provides its marine transportation services under (i) spot contracts covering a single voyage and (ii) term contracts that range from a to b in length. Vessel charters, including fully found charters, time charters, consecutive voyage charters, contracts of affreightment and single voyage charters, as currently in effect and as may be entered into in the future, are referred to herein as the “Charters”."
X was organized as a limited partnership under the laws of State. It is a publicly traded partnership within the meaning of � 7704(b). X is engaged through its operating partnership, Y, and through Y's subsidiaries (hereinafter, any references to X include a reference to Y and Y's subsidiaries), in a variety of activities, including the marine transportation of crude oil, refined petroleum products and other products for a variety of charterers, including major and independent oil and gas refining companies and petroleum marketing companies. X currently provides its marine transportation services under (i) spot contracts covering a single voyage and (ii) term contracts that range from a to b in length. Vessel charters, including fully found charters, time charters, consecutive voyage charters, contracts of affreightment and single voyage charters, as currently in effect and as may be entered into in the future, are referred to herein as the “Charters”."
Tuesday, July 27, 2010
Little Change for PCAOB Under High Court Ruling
Little Change for PCAOB Under High Court Ruling
The Supreme Court’s 5–4 decision Monday in the constitutional challenge to the PCAOB will leave the agency virtually unchanged. The court’s ruling will not affect day-to-day operations of the PCAOB, the agency said.
Chief Justice John Roberts wrote the majority opinion. In it, he said the court was isolating, or “severing,” from the rest of the Sarbanes-Oxley Act the one constitutional flaw the court found regarding the power to remove PCAOB members. “The consequence is that the [PCAOB] may continue to function as before, but its members may be removed at will by the [
The court also emphasized that all other provisions of the SOX will remain in effect. “The Sarbanes-Oxley Act remains ‘fully operative as a law’ with these tenure restrictions excised,” the court said.
“The decision effectively fixes the constitutionality of the PCAOB by making board members subject to ‘at will’ removal by the
High Court Denies Business-Method Patent
High Court Denies Business-Method Patent
The U.S. Supreme Court ruled Monday that a method of hedging against fluctuations in the price of energy or other commodities was an unpatentable abstract idea. The court, however, rejected the idea that a business method could never be patentable. The case, Bilski v. Kappos (08-964), has been widely followed because of its possible far-reaching implications for business-method patents. Some business-method patents have been approved by the U.S. Patent and Trademark Office, including some concerning taxes. Some tax practitioners and groups, including the AICPA, have opposed patents for tax strategies or planning methods.
The high court upheld the substantive holding of the Federal Circuit Court of Appeals. However, the Supreme Court rejected the reasoning behind the lower court’s holding. The Federal Circuit had concluded that the hedging method was not eligible for patent under 35 USC § 101, the main statutory definition of patentable subject matter, because it failed the machine-or-transformation test. The Supreme Court’s majority opinion, written by Justice Anthony M. Kennedy, held that the application at issue was not patentable principally because it embodied an abstract idea, a mathematical procedure that, broadly applied, could allow the applicants rights over many types of hedging activities.
“Allowing petitioners to patent risk hedging would pre-empt use of this approach in all fields, and would effectively grant a monopoly over an abstract idea,” Kennedy wrote.
Financial Regulatory Reform Bill Clears Congress
Financial Regulatory Reform Bill Clears Congress
pdate: Obama Signs Dodd-Frank Reform Bill, July 21, 2010
The Senate on Thursday approved a major financial regulatory reform package that President Barack Obama is expected to quickly sign into law.
The Dodd-Frank Wall Street Reform and Consumer Protection Act, which was approved by the House on June 30 before narrowly clearing the Senate, will create new regulations for companies that extend credit to consumers, exempt small public companies from Sarbanes-Oxley section 404(b), make auditors of broker-dealers subject to PCAOB regulation and change registration requirements for investment advisers. The profession successfully advocated for CPAs to be carved out of the new Consumer Financial Protection Bureau for usual and customary activities.
Financial Stability Oversight Council. The legislation creates a new systemic risk regulator called the Financial Stability Oversight Council. The council, chaired by the Treasury secretary and whose members will be heads of regulatory agencies, including the chairmen of the Federal Reserve, FDIC and SEC among others, will identify any company, product or activity that could threaten the financial system. The Federal Reserve will supervise the companies identified by the council, and the FDIC would carry out instructions by the council to close large entities under a new orderly liquidation authority. The council, through the Federal Reserve, will also have the power to break up large firms, require increased reserves, or veto rules created by another new regulator—the Consumer Financial Protection Bureau—with a two-thirds vote. Consumer Financial Protection Bureau. The Consumer Financial Protection Bureau consolidates most federal regulation of financial services offered to consumers and replaces the Office of Thrift Supervision’s seat on the FDIC board. Almost all credit providers, including mortgage lenders, providers of payday loans, other nonbank financial companies, and banks and credit unions with assets over $10 billion will be subject to new regulations. CPAs providing “customary and usual” accounting activities, including the provision of “accounting, tax, advisory, or other services that are subject to the regulatory authority of a [s]tate board of accountancy” are carved out from the bureau’s authority. In addition, other services “incidental” to such usual and customary accounting activities, to the extent that they are not offered or provided separate and apart from such customary and usual accounting activities or to consumers who are not receiving such customary and usual accounting activities, are also carved out. Refund anticipation loan providers are not exempt. SOX section 404(b) exemption. The act amends Sarbanes-Oxley (SOX) to make permanent the exemption from its section 404(b) requirement for nonaccelerated filers (those with less than $75 million in market cap) that has temporarily been in effect by order of the SEC. The act also requires the SEC to complete a study within nine months of the act’s enactment on how to reduce the burden of 404(b) compliance for companies with market caps between $75 million and $250 million. The study will consider whether any such methods of reducing the burden, or a complete exemption, would encourage companies to list on exchanges. Auditors of broker-dealers. The Dodd-Frank act amends SOX to require auditors of all broker-dealers to register with the PCAOB and gives the PCAOB rulemaking power to require a program of inspection for those auditors. However, the act allows the PCAOB, in its inspection rule, to differentiate among broker-dealer classes and exempt introducing brokers such as those who do not engage in clearing, carrying or custody of client assets. The act reconciles registration with inspection so that any auditors not covered by the inspection rule would also no longer be required to register with the PCAOB. Accounting standards. The act gives the Financial Stability Oversight Council the duty to monitor domestic and international financial regulatory proposals and developments, including insurance and accounting issues, and to advise Congress and make recommendations in such areas that will enhance the integrity, efficiency, competitiveness and stability of the U.S. financial markets. The council may submit comments to the SEC and any standard-setting body with respect to an existing or proposed accounting principle, standard or procedure. Registered investment advisers. Currently, the Investment Advisers Act of 1940 requires investment advisers with over $30 million in assets under management to register with the SEC. Advisers with assets under management between $25 million and $30 million may elect to register with the SEC. Under the Dodd-Frank act, this threshold will be raised to $100 million, thus shifting over 4,000 of approximately 11,500 SEC-registered investment advisers to state securities regulatory oversight, said AICPA Senior Manager Teighlor March. However, the act provides certain exceptions to this requirement. For example, if an adviser would have to register in 15 or more states as a result, the act provides an option to register instead with the SEC. Aiding and abetting securities fraud. Because it lowers the legal standard from “knowing” to “knowing or reckless,” the act may make it easier for the SEC to prosecute aiders and abettors of those who commit securities fraud under the Securities Act of 1933, the Securities Exchange Act of 1934, and the Investment Advisers Act of 1940. The AICPA and state CPA societies successfully lobbied to exclude more onerous amendments to the bill that would have opened the door for trial attorneys to file private rights of action. Advisers to private funds. Significantly, the act eliminates the private adviser exemption under the Investment Advisers Act of 1940, which will consequently result in more advisers’ having to register with the SEC. Advisers to venture capital funds remain exempt from registration, as well as advisers to private funds if such an adviser acts solely as an adviser to private funds and has U.S. assets under management below $150 million. It also amends the Investment Advisers Act to specifically exclude “family offices” from registration as an investment adviser. Executive compensation. The act requires a nonbinding shareholder vote on executive pay. Compensation based on financial statements that are restated must be returned for the three years preceding the restatement in an amount equal to the excess of what would have been paid under the restated results. Listing exchanges will enforce the compensation policies. “Management focus on accounting accuracy may be enhanced, but in the end compensation committees may still set compensation at the board’s discretion,” said AICPA Technical Manager Sharon Strother. “Companies may need to review existing compensation contracts.” The act also requires directors on compensation committees to be independent of the company and its management, and requires new disclosures regarding compensation. Chairman and CEO structure disclosure. The bill requires the SEC, within 180 days after enactment, to issue rules requiring companies to disclose in the proxy statement why they have separated, or combined, the positions of chairman and CEO. Office of Thrift Supervision (OTS). The OTS, which is currently the regulator for savings-and-loan (S&L) financial institutions, will be abolished. Under the reforms, financial institutions currently chartered as S&Ls will be regulated by the Office of the Comptroller of the Currency, which also regulates federally chartered banks. —Matthew G. Lamoreaux (mlamoreaux@aicpa.org) is a JofA senior editor.
Thursday, July 15, 2010
Saturday, July 10, 2010
SubChapter M Tax: irs private letter ruling 201024049 - collars and hedges
SubChapter M Tax: irs private letter ruling 201024049 - collars and hedges: "Taxpayer entered into a collar transaction (involving a series of puts and calls) which�you believe was designed to manage pricing risks associated with its inventory sales. �Though not identified as such, Taxpayer later claimed that the puts that it acquired were�hedging transactions under section 1221, but it contends that the calls were not�hedges. You are currently assisting Exam with the audit and evaluation of the call�options, including whether they were hedging transactions. You have also generally�inquired regarding Taxpayer’s tax accounting treatment of the call options. For purposes�of this email, it is assumed that facts will show the calls were qualifying section 1221�hedges but for Taxpayer’s failure to identify them as hedges."
SubChapter K Tax: irs private letter ruling 201016026 - rulings under 7704
SubChapter K Tax: irs private letter ruling 201016026 - rulings under 7704: "This letter responds to a letter dated July 1, 2009, and subsequent�correspondence by X's authorized representative, requesting rulings under � 7704 of�the Internal Revenue Code on behalf of X."
Taxation of Publicly Traded Partnerships: SubChapter K Tax: irs private letter ruling 201025037 - qualifying income under 7704(d)
Taxation of Publicly Traded Partnerships: SubChapter K Tax: irs private letter ruling 201025037 - qualifying income under 7704(d): "'This letter responds to a letter dated ----------------------, submitted on behalf of X,�requesting a ruling that income derived from providing marine services to facilitate the�berthing of liquefied natural gas (LNG) tankers that call on X’s LNG receiving terminal is�qualifying income within the meaning of � 7704(d)(1)(E) of the Internal Revenue Code'"
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