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Sunday, December 16, 2018

Interesting Modifications in FATCA Proposed Regulations

New Proposed Regulations modify withholding and other misc. requirements under FATCA and chapter 3. Some of the more interesting changes include:

  1. No Withholding on Gross Proceeds. Under Code §§471(a) and 1472, withholdable payments made to certain FFIs and certain NFFEs are subject to withholding under chapter 4. Under Code §1473(1)  the term “withholdable payment” means: (i) any payment of interest (including any original issue discount), dividends, rents, salaries, wages, premiums, annuities, compensations, remunerations, emoluments, and other fixed or determinable annual or periodical gains, profits, and income, if such payment is from sources within the U.S.; and (ii) any gross proceeds from the sale or other disposition of any property of a type which can produce interest or dividends from sources within the U.S. Because of the extensive network of agreements that have developed, the IRS has determined that the current chapter 4 withholding requirements already serve as a significant incentive for FFIs investing in U.S. securities to avoid status as nonparticipating FFIs. Therefore, withholding under (ii) above on gross proceeds will no longer be required.
  2. Extension of Implementation of Withholding on Foreign Passthru Payments. The Proposed Regulations will further extend the time for withholding on foreign passthru payments. Thus, a participating FFI will not be required to withhold tax on a foreign passthru payment made to a recalcitrant account holder or nonparticipating FFI before the date that is two years after the date of publication in the Federal Register of final regulations defining the term “foreign passthru payment.”
  3. Insurance Premiums. Premiums for insurance contracts that do not have cash value will be excluded nonfinancial payments and, therefore, not withholdable payments.
  4. “Investment Entity” Definition. An entity is an investment entity (and therefore a financial institution) if the entity’s gross income is primarily attributable to investing, reinvesting, or trading in financial assets and the entity is “managed by” another entity that is a depository institution, custodial institution, insurance company, or an investment entity described in Reg. §1.1471-5(e)(4)(i)(A). The preamble to the proposed regulations clarify that an entity would not be “managed by” another entity solely because the first-mentioned entity invests all or a portion of its assets in such other entity, and such other entity is a mutual fund, an exchange traded fund, or a collective investment entity that is widely held and is subject to investor-protection regulation. However, in an investor in a “discretionary mandate” will be considered as managed by the financial institution. A “discretionary mandate” is an investment product or solution offered by a financial institution to certain clients where the financial institution manages and invests the client’s funds directly (rather than the client investing in a separate entity) in accordance with the client’s investment goals.

Generally, taxpayers may rely on the Proposed Regulations until final regulations are issued.

Preamble to Prop Reg REG-132881-17; Proposed Regulations §1.1441-1, Proposed Regulations §1.1441-6, Proposed Regulations §1.1461-1, Proposed Regulations §1.1461-2, Proposed Regulations §1.1471-1, Proposed Regulations §1.1471-2, Proposed Regulations 1.1471-3, Proposed Regulations §1.1471-4, Proposed Regulations §1.1471-5, Proposed Regulations §1.1473-1, Proposed Regulations §1.1474-1, Proposed Regulations 1.1474-2

Sunday, December 09, 2018

Applicable Federal Rates Chart - Through December 2018


Federal Tax Overpayment & Underpayment Interest Rates


COMMENT: These rates are on the way up. This is helpful for taxpayers who are due a refund, and painful for those that have tax deficiencies.

Sunday, December 02, 2018

A Chart to Help You in Planning Homestead Dispositions

I’ve been giving some recent seminars on Florida homestead law. One of the topics I discussed are the limitations on devise of homestead, and some of the obvious and/or hidden planning problems that result when the limitations apply (and how to deal with them when they do arise).

I thought a table that can be used as a quick reference of these problems would be useful. I think this is especially so for attorneys during client discussions or drafting to make sure there is not a hidden problem that was not or is not being considered in planning.

I’ll be inserting this as a new practice aid in new editions of my treatise, Rubin on Florida Homestead. The treatise has an extended discussion of the principal planning that can be done to avoid most of these problems.

I developed some other charts and checklists in these seminars, which I will be rolling out here and in the treatise in the coming weeks.

You can download a PDF of the new table from Dropbox here. Since this is newly developed, if anyone sees any errors or omissions or has other comments, please send me an email at