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Saturday, July 15, 2017

IRS Regulations on the Chopping Block

Tax practitioners have complained for years about the ever-expanding scope and complexity of both the Internal Revenue Code and Treasury Regulations. A possible shrinkage in the Treasury Regulations may soon occur.

On April 21, 2017, President Trump issued Executive Order 13789, a directive designed to reduce tax regulatory burdens. The order instructed the Secretary to submit a 60-day interim report identifying regulations that (i) impose an undue financial burden on U.S. taxpayers; (ii) add undue complexity to the Federal tax laws; or (iii) exceed the statutory authority of the Internal Revenue Service (IRS). The order further instructs the Secretary to submit a final report to the President by September 18, 2017, recommending “specific actions to mitigate the burden imposed by regulations identified in the interim report.”

Treasury has identified numerous regulations that meet the criteria, It remains to be seen what Treasury will recommend as to the subject regulations, be it simplification or repeal.

Some of the key provisions that are targeted include:

  • Proposed Regulations under Section 2704 on Restrictions on Liquidation of an Interest for Estate, Gift and Generation-Skipping Transfer Taxes.
  • Temporary Regulations under Section 752 on Liabilities Recognized as Recourse Partnership Liabilities.
  • Final and Temporary Regulations under Section 385 on the Treatment of Certain Interests in Corporations as Stock or Indebtedness.
  • Final Regulations under Section 367 on the Treatment of Certain Transfers of Property to Foreign Corporations.

Notice 2017-38

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