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Tag Archive for IRS Announcement

Farmers And Ranchers Affected By Drought Have Extra Time To Sell Livestock

IRS Announcement

Drought can be devastating to farmers and ranchers. Those who were forced to sell livestock due to drought may get extra time to replace the livestock. They may also have more time to defer tax on any gains from the forced sales.

Here are some facts to help farmers understand how the deferral works and if they are eligible.

  • The one-year extension gives eligible farmers and ranchers until the end of the tax year after the first drought-free year to replace the sold livestock.
  • The farmer or rancher must be in an applicable region. An applicable region is a county designated as eligible for federal assistance, as well as counties contiguous to that county.
  • The farmer’s county, parish, city or district included in the applicable region must be listed as suffering exceptional, extreme or severe drought conditions by the National Drought Mitigation Center. All or part of 32 states, plus Guam, the U.S. Virgin Islands and the Commonwealths of Puerto Rico and the Northern Mariana Islands, are listed. The list of applicable regions is in Notice 2019-54 on IRS.gov.
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Tax Cuts And Jobs Act: Comparison For Large Businesses And International Taxpayers

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The Tax Cuts and Jobs Act (“TCJA”) made significant changes that affect international and domestic businesses, such as deductions, depreciation, expensing, tax credits and other tax items. This side-by-side comparison can help taxpayers understand the changes and plan accordingly.

Some provisions of the TCJA that affect individual taxpayers can also affect business taxes. Businesses and self-employed individuals should review tax reform changes for individuals and determine how these provisions work with their business situation.

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Changes To Depreciation And Expensing For Businesses

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The Tax Cuts and Jobs Act changed some laws on depreciation and expensing. These changes can affect a business’s tax situation. Here are the highlights:

  • Businesses can immediately expense more under the new law.
  • Temporary 100 percent expensing for certain business assets (first year bonus depreciation).
  • Changes to depreciation limitations on luxury automobiles and personal use property.
  • The treatment of certain farm property changed.
  • Applicable recovery period for real property.
  • Use of alternative depreciation system for farming businesses.

Taxpayers can use a safe harbor method to figure depreciation deductions for passenger automobiles qualifying for the 100-percent additional first year depreciation deduction and subject to depreciation limitations. The safe harbor allows depreciation deductions for the excess amount during the recovery period subject to depreciation limitations applicable to passenger automobiles. To apply the safe-harbor method, the taxpayers must use the applicable depreciation table in Appendix A of Publication 946, How to Depreciate Property. The safe harbor method doesn’t apply to a passenger automobile for which the taxpayer elected out of the 100-percent additional first year depreciation deduction or elected to expense all or a portion of the cost of the passenger automobile.

Find more details in FS-2018-9, New rules and limitations for depreciation and expensing under the Tax Cuts and Jobs Act, and Additional First Year Depreciation Deduction (Bonus) – FAQ.

 

 

IRS Issues Proposed Regulations: Deduction For Foreign-Derived Intangible Income

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The Internal Revenue Service issued proposed regulations under section 250 of the Internal Revenue Code, which offers domestic corporations deductions for foreign-derived intangible income (FDII) and global intangible low-taxed income. Section 250, as well as section 951A dealing with global intangible low-taxed income, was added by the 2017 Tax Cuts and Jobs Act (TCJA).

These proposed regulations provide guidance on both the computation of the deductions available under section 250 and determination of FDII. In addition, the proposed regulations provide rules for the computation of FDII in the consolidated return context. Proposed guidance on the computation of global intangible low-taxed income was published in the Federal Register on Oct. 10, 2018.

New reporting rules requiring the filing of Form 8993, Section 250 Deduction for Foreign-Derived Intangible Income and Global Intangible Low-Taxed Income, are also described in the proposed regulations.

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Don’t Count On A Hurricane For Tax Extension

The IRS has granted an extension of time to file 2016 income tax returns for individuals and businesses impacted by Hurricane Harvey. The new deadline is January 31, 2018. Eighteen Texas counties are included in this extension – Aransas, Bee, Brazoria, Calhoun, Chambers, Fort Bend, Galveston, Goliad, Harris, Jackson, Kleberg, Liberty, Matagorda, Nueces, Refugio, San Patricio, Victoria, and Wharton. Other counties could be added. In addition, if a taxpayer outside the designated area can demonstrate that records necessary to complete the return are located in the affected area, an extension may be granted.

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