Proposed Regulations are given no more weight than an argument in a brief.
Proposed Regulations are given no more weight than an argument in a brief.
Column (a). If you are disclosing a position contrary to a rule (such as a statutory provision or IRS revenue ruling), you must identify the rule in column (a).
, but according to Cornell Law's Legal Information Instituteat any time during the 10-year period beginning on the date of the enactment of the Tax Cuts and Jobs Act
. But I digress.The date of the enactment of the Tax Cuts and Jobs Act, referred to in subsec. (l)(1), probably means the date of the enactment of title I of Pub. L. 115–97, which was approved Dec. 22, 2017. Prior versions of the bill that was enacted into law as Pub. L. 115–97 included such Short Title, but it was not enacted as part of title I of Pub. L. 115–97.
. 965(a)'s title is26 U.S. Code § 965 - Treatment of deferred foreign income upon transition to participation exemption system of taxation
. Then we jump to 965(h), which is the election to pay in 8 (unequal) installments. It says in (5)(a) Treatment of deferred foreign income as subpart F income
. Does that last clause make this a "legislative reg.", similar to the consolidated return regs.? And if so, won't that only be true when the regs. are made final?(5) Election
Any election under paragraph (1) shall be made not later than the due date for the return of tax for the taxable year described in subsection (a) and shall be made in such manner as the Secretary shall provide.
Q6. When must an election with respect to section 965 of the Code be made?
A6. An election with respect to section 965 of the Code must be made by the due date (including extensions) for filing the return for the relevant year. However, even if an election is made under section 965(h) of the Code to pay a net tax liability under section 965 of the Code in installments, the first installment must be paid by the due date (without extensions) for filing the return for the relevant year.
Posted: 03/13/2018
Q7. How is an election with respect to section 965 of the Code made on a 2017 tax return?
A7. A person makes an election under section 965 of the Code or the election provided for in Notice 2018-13, Section 3.02, by attaching to a 2017 tax return a statement signed under penalties of perjury and, in the case of an electronically filed return, in Portable Document Format (.pdf), for each such election. Each such statement must include the person’s name, taxpayer identification number and any other information relevant to the election, such as the net tax liability under section 965 with respect to which the installment election under section 965(h)(1) of the Code applies, the name and taxpayer identification number of the S corporation with respect to which the deferral election under section 965(i)(1) of the Code is made, the section 965(a) inclusion amount with respect to which the election under section 965(m)(1)(B) of the Code applies, the amount described in section 965(n)(2) of the Code to which the election under section 965(n)(1) of the Code applies, and the name and taxpayer identification number, if any, of the specified foreign corporation with respect to which the election under Notice 2018-13, Section 3.02, is made. Model statements are included in Appendix: Q&A7. Each election statement must have the applicable title and, in the case of an attachment in Portable Document Format (.pdf) included with an electronically filed return, the file name reflected in the following table:
This document has been submitted to the Office of the Federal Register (OFR) for publication and is currently pending placement on public display at the OFR and publication in the Federal Register. The version of the proposed rule released today may vary slightly from the published document if minor editorial changes are made during the OFR review process. The document published in the Federal Register will be the official document.
2. Extensions
Comments requested an extension of time for reporting and paying section 965- related amounts and an extension of time for making the section 965(h) election. The statute provides for an extended time to file returns reporting section 965-related amounts and to make applicable elections. In addition, with the section 965(h) election, the statute provides a method for taxpayers to delay payment of the total net tax liability under section 965. Furthermore, as discussed in Part VIII.C.3 of this Explanation of Provisions section, the proposed regulations provide that a taxpayer eligible to make a section 965(h) election may make the election on its timely-filed return taking into account extensions, if any, or any additional time that would have been granted if the person had made an extension request. In addition, as described in section 3.05(e) of
Notice 2018-26, the proposed regulations provide that for a person who is a specified 98
individual (as defined in proposed §1.965-7(g)(9)) for the year within which an installment payment would be required to be made who makes a section 965(h) election and who otherwise receives an extension of time to file and pay under §1.6081-5(a)(5) or (6), the due date for an installment payment will be the fifteenth day of the sixth month following the close of the prior taxable year, regardless of whether the person was a specified individual for the year of the person’s section 965(a) inclusion. See proposed §1.965-7(b)(1)(iii)(B). Moreover, the IRS has announced relief from additions to tax (and related acceleration events under section 965(h)(3)) for certain individual filers that do not timely pay their first installment of tax due with respect to the 2017 tax year under section 965(h). For more information, see “Questions and Answers about Reporting Related to Section 965 on 2017 Tax Returns,” Q&A 16, available at https://www.irs.gov/newsroom/questions- ... elated-to- section-965-on-2017-tax-returns. Thus, comments requesting additional extensions are not adopted.
(2) Manner of making election--(i) Eligibility. Any person with a section 965(h) net tax liability may make the section 965(h) election, provided that, with respect to the person, none of the acceleration events described in paragraph (b)(3)(ii) of this section have occurred before the election is made. Notwithstanding the preceding sentence, a person that would be eligible to make the section 965(h) election but for the occurrence of an event described in paragraph (b)(3)(ii) of this section may make the section 965(h) election if the exception described in paragraph (b)(3)(iii)(A) of this section applies.
(ii) Timing. A section 965(h) election must be made no later than the due date (taking into account extensions, if any, or any additional time that would have been granted if the person had made an extension request) for the return for the relevant taxable year. Relief is not available under §301.9100-2 or 301.9100-3 to file a late election.
(iii) Election statement. Except as otherwise provided in publications, forms, instructions, or other guidance, to make a section 965(h) election, a person must attach a statement, signed under penalties of perjury, to its return for the relevant taxable year. The statement must include the person’s name, taxpayer identification number, total net tax liability under section 965, section 965(h) net tax liability, section 965(i) net tax liability with respect to which a section 965(i) election is effective (if applicable), and the anticipated amounts of each installment described under paragraph (b)(1)(i) of this
206
section. The statement must be filed in the manner prescribed in publications, forms, instructions, or other guidance.
The proposed regulations allow until the extended due date. If the amended return is filed after the extended due date of the tax return, wouldn't the position be contrary to both the statute and the proposed regulation? If so, what would be your authority for taking a position on the amended tax return that such an election can be made at that time? I don't see much ambiguity in the statute.shall be made not later than the due date for the return of tax for the taxable year.
Nilodop wrote:Amazingly (to me), this sentence appears in the 8275 (not 8275-R) instructions, thus implying (again, to me) rough equivalence of weight of authority between a statutory provision and a revenue ruling.Column (a). If you are disclosing a position contrary to a rule (such as a statutory provision or IRS revenue ruling), you must identify the rule in column (a).
Nilodop wrote:OK, so even though a statute and a final reg. have rather heavy authority, certainly as compared to the rev rul, IRS wants to be put on notice with an 8275-R for the position contrary to a reg., but they are fine with an 8275, which is used for positions contrary to various authorities other than a final reg., including a statutory provision. I'd have expected IRS to want to know with some emphasis when we take the latter position.
The Secretary shall prescribe such regulations or other guidance as may be necessary or appropriate to carry out the provisions of this section, including—
(1) regulations or other guidance to provide appropriate basis adjustments, and
(2) regulations or other guidance to prevent the avoidance of the purposes of this section, including through a reduction in earnings and profits, through changes in entity classification or accounting methods, or otherwise.
The Secretary shall prescribe such regulations as he may deem necessary in order that the tax liability of any affiliated group of corporations making a consolidated return and of each corporation in the group, both during and after the period of affiliation, may be returned, determined, computed, assessed, collected, and adjusted, in such manner as clearly to reflect the income-tax liability and the various factors necessary for the determination of such liability, and in order to prevent avoidance of such tax liability. In carrying out the preceding sentence, the Secretary may prescribe rules that are different from the provisions of chapter 1 that would apply if such corporations filed separate returns.
Q12. If a person has already filed a 2017 tax return, what should the person do?
A12. The person should consider filing an amended return based on the information provided in these FAQs and Appendices. Failure to submit a return in this manner may result in processing difficulties and erroneous notices being issued. Failure to accurately reflect the net tax liability under section 965 of the Code in total tax could result in interest and penalties.
In order to amend a return, a person would file the applicable form for amending the return pursuant to regular instructions and would attach:
amended versions of forms and schedules necessary to follow the instructions in these FAQs,
any election statements, and
the IRC 965 Transition Tax Statement included in Appendix: Q&A3.
Posted: 03/13/2018
. I don't think the Q&As have been clarified on this point. How about we offer the taxpayer the opportunity to follow Q&A 12 and include the 8275 in the amended tax return. Even with a lack of substantial authority, it may be reasonable to believe the IRS was providing relief for late elections in the first year of application – even after the extended due date.. In light of the language in Q&A 12, as opposed to the relief under Regulations sections 301.9100-2 and 301.9100-3 and the limiting language in the Proposed Regulations, greater clarification of the time to file and/or amend missed filings would be helpful because both taxpayers and certain practitioners may be more likely to access the FAQs than the final regulations and, consequently, erroneously believe they have a three-year period to elect.
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