5 Critical Changes in the Federal Taxation of Corporations

Corporate tax, finance and accounting professionals need to keep a sharp eye on shifts in the maze of tax rules and regulations, which can be challenging. The authors of CCH Expert Treatise: Federal Taxation of Corporations and Shareholders, Andrew Eisenberg and Daniel Schneider, track federal taxation trends. They have narrowed the issues down to the top five to watch right now:

1. Congressional conversation about corporate tax rates. The push to make U.S. corporations more competitive worldwide will become more heated as the 2012 elections approach and likely last beyond that time. Eisenberg and Schneider expect the discussion to focus on lowering corporate taxes to make U.S. rates more competitive with those in other countries. The authors, however, can’t predict the outcome.
2. Unless Congress extends it, the lower tax rate on dividends received by individuals will expire at the end of 2012. The uncertainty around whether the lower rates will be extended complicates corporate dividend payment planning. In addition, higher dividend rates will affect the use of redemption transactions to effectuate corporate distributions, which could in turn make stockholders’ ability to pass on family control of company stock more expensive.
3. Stock and asset acquisitions can now qualify more easily as reorganizations under the Internal Revenue Code.This is because the IRS has refinalized the signing date rule in continuity of interest regulations. This rule allows taxpayers to take the position that continuity of interest is based on the signing date value of the issuing corporation stock received in the transaction, rather than the closing date value of such stock.
4. The rule for related party reorganizations, the “D” reorganization, has been updated. It now eliminates the ability of taxpayers to shift tax basis in corporate intergroup restructuring transactions. Taxpayers can no longer shift tax basis among blocks of stock to increase loss and/or reduce gain.
5. The IRS has released guidance on how it will administer penalties under the economic substance doctrine codified in 2010. Under the guidance, agents and counsel must now obtain approval from the national IRS office before imposing penalties related to the economic substance doctrine.

Stay on top of these kinds of key changes with CCH Expert Treatise: Federal Taxation of Corporations and Shareholders.

 

AUTHOR

Wolters Kluwer Tax and Accounting

Wolters Kluwer Tax and Accounting is a leading provider of software solutions and local expertise that helps tax, accounting, and audit professionals research and navigate complex regulations, comply with legislation, manage their businesses and advise clients with speed, accuracy and efficiency. Wolters Kluwer Tax and Accounting is part of Wolters Kluwer N.V. (AEX: WKL), a global leader in information services and solutions for professionals in the health, tax and accounting, risk and compliance, finance and legal sectors. We help our customers make critical decisions every day by providing expert solutions that combine deep domain knowledge with specialized technology and services. Wolters Kluwer reported 2016 annual revenues of €4.3 billion. The company, headquartered in Alphen aan den Rijn, the Netherlands, serves customers in over 180 countries, maintains operations in over 40 countries and employs 19,000 people worldwide. Wolters Kluwer shares are listed on Euronext Amsterdam (WKL) and are included in the AEX and Euronext 100 indices. Wolters Kluwer has a sponsored Level 1 American Depositary Receipt program. The ADRs are traded on the over-the-counter market in the U.S. (WTKWY).

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