US Tax Reform
US Tax Reform could give rise to sweeping, complex changes for companies with a US footprint. To help you stay informed, we'll be updating this hub with all the latest comments and analysis as the situation develops. To request access to all the Insights and Resources across the PwC Suite, click the button at the top of the pages.
US Treasury and the IRS have released final regulations and proposed regulations under Section 163(j). Section 163(j), which was modified by the 2017 tax reform act and the CARES Act, generally limits US business interest expense deductions to the sum of business interest income, 30% (or 50%, as applicable) of adjusted taxable income (ATI), and the taxpayer’s floor plan financing interest for the tax year.
The US Treasury has released Final Regulations and Proposed Regulations under Section 954, and Section 951A as enacted by the 2017 tax reform legislation (the Act). These regulations relate to the treatment of income that is subject to a high rate of foreign tax under the global intangible low-taxed income (GILTI) and subpart F income regimes.
Treasury and the IRS, recently released final regulations for the Foreign-Derived Intangible Income (FDII) and Global Intangible Low-Taxed Income (GILTI) (the Section 250 deduction) as enacted by the 2017 tax reform legislation. The Section 250 deduction generally provides taxpayers a deduction with respect to deemed intangible income earned from servicing foreign markets directly from the United States or through controlled foreign corporations (CFCs). If you missed our webcast on 21 July where we discussed the Section 250 deduction guidance you can watch the replay here.
US Treasury and the IRS have released 295 pages of final regulations addressing the Deduction for Foreign-Derived Intangible Income and Global Intangible Low-Taxed Income (the Section 250 deduction) as enacted by the 2017 tax reform legislation. The Section 250 deduction generally provides taxpayers a deduction with respect to deemed intangible income earned from servicing foreign markets directly from the US or through controlled foreign corporations.
The US Federal Register released the final regulations for the FDII and GILTI deduction under Section 250. Section 250 was enacted under the 2017 tax reform act and set forth a deduction for domestic corporations equal to the sum of 37.5 percent of their foreign-derived intangible income and 50 percent of their global intangible low-taxed income and section 78 amount, up to a limit based on taxable income. Section 250 also introduced rules for determining FDII.
Treasury and the IRS released regulations under Section 385 that finalize the treatment of certain qualified short-term debt instruments, transactions involving controlled partnerships, and transactions involving consolidated groups for purposes of classifying certain interests in corporations as stock or indebtedness under final regulations published in 2016. While the 2020 Final Regulations, published May 13, do not contain substantive changes from the proposed and temporary regulations that were issued contemporaneously with the issuance of the 2016 Final Regulations, they have practical impact for multinational enterprises and present several issues and potential traps that corporations should consider in structuring or revising their intercompany debt or financing arrangements.
The IRS recently issued correcting amendments to the final and proposed foreign tax credit (FTC) regulations released last December. While primarily addressing clerical issues (such as updating incorrect cross references), the amendments make important corrections with respect to the waiver of the five-year binding rule regarding the method for allocating and apportioning R&E expense and the pre-effective date application scope of the proposed regulations.
The CARES Act provides a technical correction to a drafting error in the 2017 tax reform act, which had omitted qualified improvement property (QIP) from the definition of qualified property eligible for additional first-year (bonus) depreciation. The IRS has released Rev. Proc. 2020-25, allowing taxpayers to change depreciation for QIP placed in service after 31 December 2017. The revenue procedure also allows taxpayers to make certain elections late or to revoke or withdraw previous elections.
US Treasury and the IRS recently published regulations that finalize 2018 proposed regulations addressing anti-hybrid rules under Sections 245A(e), 267A, and 1503(d). On the same date, Treasury and the IRS issued additional proposed regulations under Sections 245A(e), 881 (with respect to the anti-conduit regulations), and 951A. Read our additional analysis here.
The US Treasury has released final regulations under Sections 245A(e) and 267A and proposed regulations under Sections 245A(e), 881, and 951A. Section 245A generally provides a 100% dividends received deduction (DRD) for the foreign-source portion of dividends received by a US corporation from foreign corporations with respect to which it is a 10% US shareholder. Section 245A(e), however, denies the DRD for any amount received from a controlled foreign corporation (CFC) for which the CFC receives a deduction or other benefit for foreign income tax purposes (a hybrid dividend). Section 267A disallows deductions for certain related-party payments in connection with hybrid transactions or made by or to hybrid entities.
US Treasury and the IRS recently released final regulations relating to the limitation on foreign tax credits (FTCs) for foreign taxes paid or accrued in connection with covered asset acquisitions (CAAs) under Section 901(m). Section 901(m) disallows a portion of the FTC attributable to a basis difference in assets acquired in a CAA. The final regulations are generally consistent with temporary and proposed regulations issued on December 6, 2016, with targeted revisions to address some comments received from taxpayers.
The 2017 tax reform act significantly limited the trade or business expense deduction for meals and entertainment by generally disallowing deductions for business entertainment expenses and removing the de minimis fringe benefit exception to the 50% deduction disallowance for meal expenses. These amendments apply to expenses paid or incurred after December 31, 2017. The IRS and Treasury have published proposed regulations interpreting these rules.
With a US presidential election on the horizon, doubts about political and economic stability, and continuing shifts in global tax policy, 2020 promises to be an eventful year with uncertainty around the impact that these factors will have on the business and tax community. How should you prepare for what lies ahead in 2020?
Divided government, the impeachment of President Trump, global tensions and a focus on the 2020 elections -- While US and global tax rules constantly evolve, the scope and pace of the changes currently under consideration or already underway is unprecedented.
The IRS recently released proposed regulations under Section 382(h), which partially withdraw selected text of the 2019 proposed Section 382(h) regulations primarily relating to the date the final Section 382(h) regulations would become applicable to taxpayers.
2019 was an eventful year that saw the IRS and Treasury issue a number of important regulations and other published guidance under the 2017 tax reform act. This Insight summarizes many of those developments and other tax issues and provisions.
US Treasury recently released both Final and Temporary Regulations along with Proposed Regulations under Sections 704, 861, 901, 904, 905, 954, 960, 965 and 986. These regulations are administrative guidance with respect to the foreign tax credit regime following the enactment of the 2017 tax reform act.
The Qualified Opportunity Zone program, enacted in the 2017 tax reform legislation, has triggered developments in Congress and the Administration. Several bills have been introduced that are intended to strengthen reporting requirements, while bills by Senate Finance Committee Ranking Member Ron Wyden (D-OR) and others call for substantive changes to the Act's provisions.
Treasury has released Final Regulations and Proposed Regulations under Section 59A (‘the base erosion and anti-avoidance tax' or ‘BEAT’). BEAT, which requires certain US corporations to pay a minimum tax associated with deductible payments to non-US related parties, was enacted by the 2017 tax reform act. Treasury previously released proposed regulations under Section 59A on December 13, 2018 (published December 21, 2018 in the Federal Register).
Watch the replay from this webcast held on 9 December, where PwC industry professionals and specialists highlighted trends affecting foreign direct investment and the US operations of global companies. Panelists provided a view of 2020 including expected policy, trade and political developments.
PwC’s Washington National Tax Services on October 16 hosted the live webcast “Tax Readiness: Recession or not, how troubled businesses will be affected by the Section 382 proposed regulations”, featuring PwC Tax and Deals specialists. They discussed economic risk factors for US companies, and the tax impact that the proposed regulations under Section 382(h) (the Proposed Regulations), released by Treasury on September 9, may have on troubled businesses.
The IRS and Treasury have released long-awaited proposed regulations implementing Sections 451(b) and 451(c), added by the 2017 tax reform act, and Rev. Proc. 2019-37, which provides procedures for a taxpayer to change its method of accounting to comply with the amendments to Section 451, including the proposed regulations. This Insight discusses the Section 451(b) proposed regulations. PwC professionals discussed the proposed regulations in a Tax Readiness series webcast on September 26, 2019.
A year after the US Supreme Court’s Wayfair decision, marketplace sellers and facilitators continue to struggle applying new state thresholds, effective dates, definitions, and other provisions. Many questions remain as companies update their processes and systems while monitoring for new marketplace compliance requirements. View the replay from this recent webcast and read our Insights which highlight the discussions.
The US tax reform legislation (the Act) enacted in late 2017 made important changes that affect financing of US operations of companies not headquartered in the United States. Now that taxpayers and practitioners have had an opportunity to digest the impact of these changes, this is an excellent time to take a closer look at these provisions, especially with the IRS having published pertinent regulations and other guidance, with more expected in the near future.
The comprehensive federal tax reform legislation enacted in late 2017 and subsequently issued guidance significantly affect the ability of taxpayers to claim foreign tax credits (FTCs). The ability to claim FTCs is closely tied to how certain expenses - including selling, general, and administrative (SG&A) and stewardship - are allocated and apportioned among different categories of income. Similar rules may also affect foreign-derived intangible income (FDII) benefits. Watch the replay from a recent PwC webcast featuring specialists who discussed these issues and read our Insight highlighting those discussions.
Watch this recording where our panel of State and Local Tax (SALT) specialists discussed the potential for state tax reform including a split roll property tax and extending the sales tax to services, the state’s response to Wayfair, and the state’s new tax appeals process.
PwC recently submitted a comment letter regarding the proposed regulations under Section 1446(f) that address tax withholding and information reporting on partnerships with a US trade or business. Section 1446(f) was enacted as part of the 2017 tax reform act, and the proposed regulations were issued on May 13, 2019.
US Treasury and the IRS recently released final and proposed regulations under Section 951A as enacted by the 2017 tax reform legislation and provisions related to implementing Section 951A. The Final Regulations and Proposed Regulations provide guidance relating to a US shareholder's pro rata share of its global intangible low-tax income (GILTI).
US Treasury and the IRS recently released 105-page temporary regulations under Section 245A as enacted by the 2017 tax reform legislation. The regulations seek to limit the benefits of section 245A where “the literal effect of section 245A would reverse the intended effect of the subpart F and GILTI regimes.”
View the recording of this webcast in our Tax readiness series: Q2 financial reporting considerations. Our panel of Tax Accounting Services (TAS) specialists will take a deep dive into relevant tax accounting matters and recent tax developments.
US Treasury released, on May 17, proposed regulations under Sections 954 and 958 (the Proposed Regulations) for the purposes of computing subpart F income and global intangible low-taxed income (GILTI).
In this webcast our state tax experts explained the current US sales tax and state income tax requirements from a US inbound perspective, and covered examples of circumstances where a compliance responsibility may exist and the potential consequences.
The Opportunity Zones (OZ) Program is intended to spur investment in economically distressed communities and promote long-term economic growth in these communities through a variety of investment vehicles. Over the past several months, taxpayers have anticipated the proposed regulations with the expectation that they will provide a certain level of assurance on key issues that may affect investments in qualified opportunity funds.
The US 2017 tax reform Act (the Act) continues to have a substantial impact on multinational companies, whether headquartered in the United States or elsewhere. In some instances, the provisions of the Act are causing unintended consequences for non-US headquartered companies (US inbound companies) as they interact with provisions of their home countries’ tax laws. Even a positive aspect of US tax reform – such as the reduction of the corporate income tax rate – may negatively impact certain business operations of US inbound companies.
Watch the replay from the second of our two-part U.S. Tax Reform Webcast series held on 27 March. This webcast series is an extension of our previous series on U.S. tax reform from an EMEA perspective.
The 2017 tax reform act has intertwined S corporation ‘reasonable compensation’ with the new Section 199A deduction in that the amount of compensation paid to S corporation shareholder employees can impact the extent to which the Section 199A deduction is allowed.
The 2017 US tax reform act repealed Internal Revenue Code Section 708(b)(1)(B), otherwise referred to as the partnership technical termination provision. Under the revised federal law, a sale or exchange of 50% or greater interest in a partnership does not terminate the partnership nor end the partnership’s taxable year.
The 2017 tax reform act (the Act) introduced new Code Section 965, which imposes a ‘toll charge’ on mandatory deemed repatriation of certain deferred foreign earnings. The IRS on January 15 released final regulations under Section 965 that retain the overall structure and basic approach of the proposed Section 965 regulations released on August 1, 2018, with modifications.
The Section 199A final regulations raise a number of important issues. PwC on February 12 hosted a webcast featuring PwC specialists who discussed some of these issues. This Insight highlights those discussions.
The IRS has released a set of Questions and Answers (Q&As) that provide guidance on Section 965 reporting and payment requirements for 2018 tax returns, including obligations resulting from amounts included in income for the 2017 tax year.
The final Section 965 regulations, released on January 15, 2019 (and subsequently updated), specify that, for taxpayers that elected to pay their toll tax liability in installments, if a triggering event or acceleration event occurred on or before the date that the final Section 965 regulations are published in the Federal Register, then a transfer agreement to avoid an acceleration event must be filed within 30 days of that publication date in order to be considered timely filed.
Join us Thursday, January 31, 2019 from 2-3:00PM EDT for the latest webcast where we’ll share reactions to the State of the Union address and also talk through PwC’s latest thought leadership, the 2019 Tax Policy Outlook and Top Policy Trends.
The 2018 US midterm elections and partial government shutdown illustrate the intensified ongoing disagreements between the political parties on how to address many issues, including tax policy, healthcare, immigration, and the environment. A key challenge facing the new 116th Congress and President Trump, will be whether bipartisan agreements can be reached to enact significant legislation with a Democrat-controlled House and a Republican-led Senate.
This PwC Tax Insight highlights some of the major considerations in evaluating the impact of certain federal provisions and notes the need for separate state calculations for many federal tax reform matters.
Watch the replay of this webcast from Thursday 3 January 2019 where our panel of Tax Accounting Services (TAS) specialists take a deep dive into relevant tax accounting matters impacting year-end financial reporting.
The BEAT rules require certain corporations to pay a minimum tax on payments to non-US related parties. The Proposed Regulations, released on December 13, 2018, are the first regulatory guidance under new Section 59A, which was enacted by the 2017 tax reform act (the Act).
The proposed regulations raise a number of important issues. PwC on December 12 hosted a webcast featuring PwC specialists who discussed some of these issues. This Tax Insight highlights those discussions and you can watch the webcast replay.
On November 26, the US Treasury released proposed regulations (the Proposed Regulations) concerning the Section 163(j) interest expense limitation rules. We will discuss the Section 163(j) guidance in an upcoming Tax Reform Readiness series webcast.
Chairman Kevin Brady (R-TX) released a 297-page tax bill that includes a limited number of technical corrections to the 2017 tax reform act and more than 30 ‘tax extender’ provisions dealing with expired or expiring tax provisions.
On August 1, Treasury and the IRS released a 249-page set of proposed regulations under Section 965, addressing a wide range of issues regarding the toll charge. PwC on August 9 hosted a webcast featuring PwC specialists who discussed the proposed Section 965 regulations. This Insight highlights some of those discussions.
On 1 August 2018 the US Treasury and the IRS released proposed regulations under Section 965 (the Proposed 965 Regulations). The Proposed 965 Regulations provide guidance relating to the ‘toll tax’ due upon the mandatory deemed repatriation of certain deferred foreign earnings.
Companies in the U.S. were already sitting on piles of cash before tax reform passed in December 2017. Now, with a strengthening global economy and a tax overhaul that lowers the corporate tax rate from 35 to 21 percent and incentivises U.S. companies to repatriate all their previously untaxed foreign earnings, those piles of cash are poised to grow substantially. Some estimate there may be more than US$330 billion in tax savings for corporations over the next 10 years, not including the trillions of dollars held overseas that may now come home. The big question is: What will companies do with this windfall?
The 2017 tax reform reconciliation act (the Act) is having a substantial impact on US taxpayers. Among the most significant areas of impact are the international tax reform provisions and their interactions with each other.
On May 2 we hosted a webcast featuring PwC specialists who discussed some of the key interactions among these provisions. This Insight highlights some of those discussions.
The Treasury and the IRS have released Notice 2018-26, signalling intent to issue regulations related to mandatory repatriation (the 'toll tax'). Notice 2018-26 is the third notice issued as part of the transition to a new territorial tax regime under the 2017 Tax Reform Reconciliation Act, also known as the ‘Tax Cuts and Jobs Act.’
For the CFO and Corporate Treasurer, US tax reform could affect everything from capital allocation, funding strategies and liquidity management practices to structure and organisation, presenting new opportunities and risks to the prior ways of conducting business. With this in mind, they should therefore act quickly by evaluating the implications to the company and work across the enterprise to compose short and long term strategy and execution plans.
One of the biggest tax stories of recent months has been the sweeping changes being made to the US tax system. It's clear that when the world's biggest economy makes significant tax changes, it's a big deal worldwide, the effects are far-reaching and could affect all of us. What are the implications for policy makers, and what should businesses be aware of?
Any company with a US footprint is potentially impacted by US tax reform, albeit each a bit differently. Our Tax Valuations team (working alongside tax) can assist on a variety of issues which might arise out of these changes, especially with effective tax rate and provisioning modelling, the consequential impacts on deal pricing and debt push-down analysis, and any changes to operating models.
The 2017 tax reform reconciliation act - the largest overhaul of the US tax code in 31 years - is already having a substantial impact on US taxpayers, including on operating models and business strategy decisions.
The U.S. Tax Cuts and Jobs Act was signed into law on 22 December 2017 by President Donald Trump and significantly changed the taxation of non-U.S. corporations owned directly or indirectly by U.S. persons. This resource takes a closer look at who is impacted by the changes.
The US Tax Cuts and Jobs Act which was signed into law on 22 December 2017 by President Donald Trump effectively doubled the existing lifetime Estate and Gift tax exclusion amount. Prior to the tax reform, an individual’s lifetime Estate and Gift tax exclusion was $5.49 million (2017 tax year), with the new exclusion amount from 1 January 2018 increasing to $11.2 million including inflation adjustment.
We highlight the key changes together with some brief commentary on things that can be done before the end of the year to maximise the benefit of various deductions/exemptions that certain taxpayers or employers may claim.
On Friday 22 December, President Trump signed the tax reform bill (HR 1) into law. The law will lower business and individual tax rates, modernize US international tax rules, and provide the most significant overhaul of the US tax code in more than 30 years.
On 22nd December 2017, the Tax Cuts and Jobs Act, which brings significant changes to the US tax system, was signed by President Trump and has now become law. The legislation impacts the taxation of some executive compensation and a number of employee benefits.
Congress has given final approval to the House and Senate conference committee agreement on tax reform legislation (HR 1) that will lower business and individual tax rates, modernise US international tax rules, and provide the most significant overhaul of the US tax code in more than 30 years.
When it comes to accounting for tax reform under US GAAP, new questions arise every day. This “frequently asked questions” document shares our views on the most common questions. It covers topics such as accounting for tax reform by non-calendar year ends, asserting indefinite reinvestment in light of tax reform, application of SAB 118, interplay of tax reform with business combinations and goodwill impairments, and other hot topics.
On 15 December, a House and Senate conference committee reached agreement on a final version of tax reform legislation, the ‘Tax Cuts and Jobs Act,’ that would lower business and individual tax rates, modernize US international tax rules, and provide the most significant overhaul of the US tax code in more than 30 years.
We highlight some of the key considerations for individuals and employers who interact with the US, and provide some initial guidance on the proposed tax reforms which are likely to come into effect for the 2018 tax year.
The Senate Finance bill introduces a new tax on ‘global intangible low-taxed income’ and a minimum ‘base erosion and anti-abuse tax’ imposed on certain payments by a US corporation to a foreign related entity.
Watch the replay of this webcast held on Wednesday 25 September 2019 to hear perspectives from our PwC specialists as they look at expected US political and regulatory activity for the remainder of 2019.