The Economic Substance Doctrine: Coming To A State Near You?

By Jonathan Prokup Pennsylvania may soon join the other states that have challenged the use of the so-called Delaware Loophole, according to our colleagues at the State and Local Tax Blawg.  The legislation, contained in Pa. House Bill 2150, would disallow deductions that a parent operating corporation claims for royalty payments made to a "Delaware … Continue reading The Economic Substance Doctrine: Coming To A State Near You?

Treasury Finalizes Conduit Financing Regulations Under Section 881

By Jonathan Prokup On December 9th, the IRS issued final regulations under Code section 881 that treat a disregarded entity as a person to determine whether a “financing arrangement” exists for purposes of applying the conduit financing regulations.  The finalized regulations may deny tax benefits otherwise available from U.S. tax treaties when a multi-party financing … Continue reading Treasury Finalizes Conduit Financing Regulations Under Section 881

Will IRS Limit Exam’s Assertion of the Economic Substance Penalty? TIGTA Report Suggests Not.

Since codification of the economic substance doctrine in March 2010, taxpayers have expressed fears that IRS will assert the doctrine unpredictably, resulting in an in terrorem effect among taxpayers because of the lack of clear authorities interpreting the doctrine and the new 40% strict-liability penalty for falling on the wrong side of it.  To promote … Continue reading Will IRS Limit Exam’s Assertion of the Economic Substance Penalty? TIGTA Report Suggests Not.