- The U.S. Tax Court issued an opinion finding that amounts paid by the taxpayers to a “captive insurance company” were not insurance premiums for federal income tax purposes and were not deductible. The case offers a template for examining captive insurance arrangements.
- The U.S. Tax Court released an opinion concerning the effects of “net gifts” on the marital deduction under the federal estate and gift taxes.
- IRS Notice 2017-44 provides model amendments that sponsors of qualified defined benefit plans may use to amend their plan documents to offer bifurcated benefit distribution options to participants—that is, the payment of benefits partly in the form of an annuity and partly as a single sum (or other accelerated form).
- The U.S. Tax Court issued a memorandum opinion on the correct depletion percentage rate of 14% for calcium carbonates to be applied by a cement company. The court also found that the costs of minerals purchased from third parties were non-mining costs.
- An IRS Chief Counsel Advice memorandum addresses the issue of whether reserves with respect to certain annuity contracts are “life insurance reserves” as defined by section 816(b). The issue concerns a taxpayer’s characterization as a life or nonlife insurance company under subchapter L (that could substantially affect the taxpayer’s taxable income calculation because the proration calculations for tax-exempt interest and the dividends received deduction differ significantly for life and nonlife insurance companies).
- The Colorado Department of Revenue held a public hearing concerning proposals on the state’s use tax notice and reporting requirements that would affect retailers making sales into the state.
- An Arkansas administrative law judge found that the sale of tax credits by a corporate taxpayer generated business income.
- Minnesota’s tax court held that the IRC section 382 limitation (when a loss corporation undergoes an ownership change, the amount of post-change income that can be offset by pre-ownership change losses cannot exceed the section 382 limitation) was not required to be apportioned.
- A Texas appeals court held that a private company operating detention facilities for government detainees did not qualify for the residential-use exemption from the sales and use tax for gas and electricity sold.
- A Texas appeals court held that the taxpayer’s use of the federal costs of goods sold (COGS) calculation as a starting point for calculating the Texas COGS deduction did not provide sufficient evidence to support the claimed deduction. The court held that the Texas COGS deduction is to be computed on an item-by-item basis, and allowed the taxpayer to deduct subcontractor payments in calculating the taxable margin.
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- A notice from the U.S. Trade Representative (USTR) initiates an investigation for purposes of determining whether acts, policies, and practices of the government of China related to technology transfers, intellectual property, and innovation are “actionable” under U.S. law.
- The U.S. Commerce Department and USTR are conducting industry outreach and requesting comments as to the possible implications of a “Buy American” program and also how it would affect domestic procurement preferences.
- Representatives from the governments of the United States and Korea conducted a meeting to address potential modifications and amendments to the free trade agreement between the two countries.
- An advisory opinion of the World Customs Organization on the inclusion of royalties and license fees in the customs value of imported goods has implications for China customs-related matters.
Read TaxNewsFlash-Trade & Customs