Federal

Expert Analysis

• New R&E Capitalization A Costly Change For Companies

  

  Unless modified by legislation in the coming weeks, radical new capitalization rules for research and experimentation costs mean companies should brace for the loss of a major tax break starting with their 2022 tax returns, says Nancy Dollar at Hanson Bridgett.

• Congress Is Right To Advance Comprehensive Retirement Bill

  

  As 2022 comes to a close, Congress' move to include the Secure 2.0 Act, a comprehensive retirement bill, in its omnibus spending package will bring retirees and those nearing retirement more peace of mind regarding their 401(k)s, IRAs and pensions, while reducing red tape for employers, says Andy Banducci at the ERISA Industry Committee.

• 10 Pre-Deal Considerations In Cross-Border M&A Transactions

  Excerpt from Practical Guidance

  

  Sergio Galvis and Benjamin Kent at Sullivan & Cromwell discuss steps that can be taken to preemptively address important issues that acquirers of foreign businesses encounter in cross-border M&A transactions, including tax planning and political risk.

• Clean Hydrogen Developers Should Track Incentives, Risks

  

  Clean hydrogen project developers and investors should be aware of new funding opportunities from the U.S. Department of Energy and tax benefits under the Inflation Reduction Act, but must also guard against risks associated with new and evolving technologies, say Pamela Wu and Kirstin Gibbs at Morgan Lewis.

• IRS Starts Clock On Energy Projects' Labor Rule Exemption

  

  A U.S. Department of the Treasury notice published this week started the 60-day clock for clean energy projects seeking to be grandfathered from having to meet new labor requirements to qualify for enhanced tax credits, and uncertainty about how the provisions will apply should be incentive for some investors to begin construction soon, say attorneys at Eversheds Sutherland.

• Foreign Tax Credit Proposal Is Some Help, But More Is Needed

  

  New foreign tax credit regulations proposed by the U.S. Treasury Department provided some measure of relief on cost recovery and royalty withholding, two of the most troublesome aspects of the 2021 final foreign tax credit regulations, but the final regulations are still harmful to many taxpayers, making litigation inevitable, say attorneys at Fenwick.

• Anticipating The New Congress' Private Sector Investigations

  

  With Republicans claiming a new majority in the House of Representatives in the upcoming Congress, corporates and individuals should expect a sea change in Congress' investigative priorities and areas of focus — and private sector entities can take prudential steps in the near term to best prepare for and mitigate risk, say attorneys at Latham.

• Tax Equity Requires Reinstating The Home Office Deduction

  

  Congress should restore the home office deduction for W-2 workers in the interest of tax equity because permanently remote workers now bear the cost of creating quiet, dedicated work spaces, a pandemic-related shift unforeseen when the deduction was eliminated by 2017's Tax Cuts and Jobs Act, say James Mahon and Samantha Lesser at Becker.

• Keys To IRA Tax Breaks For US Green Energy, EV Production

  

  The Inflation Reduction Act includes three powerful tax incentives for domestic production of renewable energy projects and electric vehicles — but there are key questions that investors and manufacturers must ask when evaluating whether they can take advantage of these incentives, say attorneys at Troutman Pepper.

• Crypto Case Failed To Clarify Taxation Of Staking Rewards

  

  A Tennessee federal court's recent dismissal of Jarrett v. U.S. — after the IRS issued a refund for taxes paid on cryptocurrency and mooted a greater question about the tax treatment of staking rewards — leaves the crypto industry in need of guidance on the IRS’ position, say attorneys at Cadwalader.

• How The IRS May Define 'Clean Hydrogen'

  

  The Internal Revenue Service is still taking comments on how to define "clean hydrogen" for purposes of Inflation Reduction Act tax credits, but developers can look to the IRA's legislative history — as well as the European Union's struggle to define "green hydrogen" — as guideposts, says Ben Reiter at Nixon Peabody.

• What To Expect From The Post-Midterms Lame-Duck Session

  

  Depending on the results of the midterm elections, the upcoming lame-duck session may be the last chance for Congress to enact meaningful legislation for the next several years, so organizations must push through legislative priorities now, lest they are forced to restart their efforts in a much different environment next year, says James Brandell at Dykema.

• IRS' Tax Gap Statistics Don't Paint A Full Compliance Picture

  

  The Internal Revenue Service's recent report indicating a widening tax gap sheds important light on tax compliance, underlines key pressure points and provides insights into how tax administration could be improved; but tax gap estimates also have their limits, says Joyce Beebe at Rice University.