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William Byrnes (Texas A&M) tax & compliance articles

Archive for December, 2020

TaxFacts Intelligence December 16, 2020

Posted by William Byrnes on December 16, 2020


There have been a number of challenges to the requirement for physical damages in business interruption insurance policies, and this week we see a court ruling in North Carolina that CVOID-related restrictions were enough to meet the test for physical damages because they prevented the policyholder from using their property. More on this in Tax Facts, and also at our sister site FC&S.  Also, if you missed the late November webinar on “The Biggest Tax Implications for 2021” you can still register and view the recording at the link below. William Byrnes and Robert Bloink walked us through an hour of what the CARES Act and FFCRA changes may look like in 2021. Tune in!

Prof. William H. Byrnes         Robert Bloink, J.D., LL.M.

ACA Likely To Withstand Latest Challenge The U.S. Supreme Court recently heard oral arguments that will be instrumental in determining the fate of the Affordable Care Act.  Since the 2017 tax reform legislation reduced the individual mandate to $0, many challenged whether the ACA was constitutional–in other words, whether it could be considered a valid exercise of Congress’ power to tax.  Confirmation of new Supreme Court justice Amy Barrett created the real possibility that the ACA could be overturned.  However, after hearing oral arguments, two conservative justices–Roberts and Kavanaugh–indicated their support for severance.  If that happens, the individual mandate portion of the ACA would be severed from the remainder of the law.  For more information on the ACA, visit Tax Facts Online.  Read More. Read More

State Court Rules in Favor of Restaurants in Business Interruption Insurance Case A North Carolina court has ruled in favor of a group of restaurants and required the insurance company to provide business interruption coverage.  The court agreed with the plaintiffs that government stay-at-home orders and travel restrictions caused the restaurants to suffer a physical loss because they lost physical use and physical access to their businesses.  The policy at issue defined “loss” as “accidental physical loss or accidental physical damage,” but did not define “direct”, “physical loss”, or “physical damage.”  The court agreed that the businesses lost the full use and advantage of their business premises.  The court rejected the insurance company’s argument that tangible physical loss was required because, even if true, that rendered the policy language ambiguous.  Despite the fact that this was a state-level case, other courts may find the reliance on standard contract interpretation principles persuasive.  For more information on business insurance issues, visit Tax Facts Online. Read More

DOL Releases Final Rule on Considering Non-Financial Factors in Selecting Retirement Plan Investments The DOL has released a final rule on whether environmental, social and governance (ESG) factors can be considered when retirement plan fiduciaries are selecting plan investments without violating their fiduciary duties.  Plan fiduciaries are obligated to act solely in the interest of plan participants and beneficiaries when making investment decisions.  The final rule confirms the DOL position that plan fiduciaries must select investments based on pecuniary, financial factors.  Fiduciaries are required to compare reasonably available investment alternatives–but are not required to scour the markets.  The rule also includes an “all things being equal test”–meaning that fiduciaries are not prohibited from considering or selecting investments that promote or support non-pecuniary goals, provided that they satisfy their duties of prudence and loyalty in making the selection.  For more information, visit Tax Facts Online. Read More

Texas A&M, annual budget of $6.3 billion (FY2020), is the largest U.S. public university, one of only 60 accredited U.S. universities of the American Association of Universities (R1: Doctoral Universities – Highest Research Activity) and one of only 17 U.S. universities that hold the triple U.S. federal grant of Land, Sea, and Space!

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TaxFacts Intelligence December 14, 2020

Posted by William Byrnes on December 14, 2020


Looks like we have more guidance from the IRS on PPP forgiveness and deductibility of expenses. This is getting more complicated as we approach the end of the year and many taxpayers are anticipating, but have not yet received, the forgiveness of their PPP loans. The new guidance helps deal with a couple of potential types of situations that companies may find themselves in while they wait for forgiveness applications to be reviewed.

Prof. William H. Byrnes         Robert Bloink, J.D., LL.M.

IRS Releases Safe Harbors to Allow Certain PPP Loan Recipients to Deduct Business Expenses One controversial element of the PPP loan rules involves whether taxpayers who receive loan forgiveness qualify to deduct otherwise deductible business expenses.  To date, IRS’ guidance has confirmed that otherwise eligible deductions will be denied.  However, the agency has now released a safe harbor for certain taxpayers whose application for forgiveness was denied or who opted to forgo applying for forgiveness.  The safe harbors allow a taxpayer to claim a deduction in the 2020 tax year for certain otherwise deductible eligible expenses.  For more information on the safe harbor requirements, visit Tax Facts Online. Read More

IRS Confirms Position on Non-Deductibility of Business Expenses for PPP Loan Recipients Who Expect Loan ForgivenessThe IRS has released guidance confirming that PPP loan recipients who have a reasonable expectation that they will have loan amounts forgiven cannot deduct otherwise eligible business expenses.  A taxpayer that received a covered loan guaranteed under the PPP and paid or incurred certain otherwise deductible expenses may not deduct those expenses in the tax year in which the expenses were paid or incurred if, at the end of such taxable year, the taxpayer reasonably expects to receive forgiveness of the covered loan on the basis of the expenses it paid or accrued during the covered period.  That’s true even if the taxpayer has not yet submitted an application for forgiveness of the covered loan by the end of the tax year.  For more information on the implications of PPP loan forgiveness, visit Tax Facts Online. Read More

Complex Contribution Limits for Employees Participating in Multiple Employer-Sponsored Retirement PlanAs we approach the end of the year, many taxpayers may have questions about their 2020 retirement plan contribution limits.  Employees who participate in more than one plan are subject to two sets of limits: the annual additions limit and the deferral limit.  The deferral limit maxes out at $19,500, or $26,000 for clients 50 and older, in 2020.  Each participant is limited in contributing $19,500 across all retirement plans.  The annual additions limit in 2020 is $57,000 ($63,500 for those 50 and up).  The annual additions limit includes all employer and employee contributions.  Each employer-based plan gets its own annual additions limit.  Therefore, if you have two employers, each employer can contribute up to the $57,000 limit.  In other words, contributions from unrelated employers aren’t aggregated.  For more information on the 401(k) contribution limits, visit Tax Facts Online. Read More

Texas A&M, annual budget of $6.3 billion (FY2020), is the largest U.S. public university, one of only 60 accredited U.S. universities of the American Association of Universities (R1: Doctoral Universities – Highest Research Activity) and one of only 17 U.S. universities that hold the triple U.S. federal grant of Land, Sea, and Space!

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U.S. / E.U. International Tax Risk Management Zoom Team-Based Case Studies Start Jan 19 – April 25 (14 weeks)

Posted by William Byrnes on December 9, 2020


Based on weekly case studies created by the faculty, supported by reading/text materials, pre-recorded videos with PPTs, and audio podcast files made by the faculty – twice-weekly Zoom live sessions (recorded as well) of 90 – 120 minutes wherein students in teams work through the case studies generally from an assigned stakeholder perspective. Access to the extensive Texas A&M library for case study research includes by example: Lexis, Westlaw, IBFD, Kluwer-Cheetah, Thomson OneSource, BvD (Moodys), S&P CapIQ, FITCH, among several others. Apply for Texas A&M’s courses here.

  • Transfer Pricing Risk Management I Tangibles, Methods, Economics, and Data
  • Transfer Pricing Risk Management II: Intangibles, Services, Pillar 1/Digital, Formulary
  • U.S. Tax Risk Management (Data, Analytics & Technology)
  • E.U. Tax Risk Management

U.S. Tax Risk Management (Data, Analytics & Technology) syllabus

E.U. Tax Risk Management syllabus

  • Week 1 March 8, 2021 E.U. General Framework of Compliance Tax Risk Management Dr. Eva Andrés (Barcelona)
  • Week 2 March 15, 2021 Parent Subsidiary Directive, Interest, Royalties. Dr. Santiago Ibañez Marcilla
  • Week 3 March 22, 2021 The European Union proposal on a carbon border tax and its compatibility with the World Trade Organization rules Dr. Xavier Fernández Pons
  • Week 4 March 29, 2021 Free Movement of Capital (investment funds) and others Fundamental Freedoms. Dr. Eva Andrés & Dr. Andreu Olesti
  • Week 5 April 5, 2021 Cross-Border Losses – Dr. Bruno Da Silva
  • Week 6 April 12, 2021 ATAD, DAC 6, Abuse – Dr. Bruno da Silva
  • Capstone Week April 19-25: Build a client case study, wrap up

Transfer Pricing Risk Management: Tangibles, Methods, Economics, and Data (William Byrnes course materials) syllabus

  • Week 1 January 19 Arm’s Length Standard (v Formulary Approach) Dr. Bruno Da Silva & William Byrnes
  • Week 2 Jan 25 CUP & Comparables Dr. Lorraine Eden
  • Week 3 Feb 1 Cost Plus & Resale Minus Dr. George Salis
  • Week 4 Feb 8: Comparable Profits Method & TNMMDr. George Salis
  • Week 5 Feb 15 Profit Split Dr. George Salis
  • Week 6 Feb 22 Best Method Dr. Lorraine Eden
  • Capstone Week March 1

Transfer Pricing Risk Management: Intangibles and Services (William Byrnes course materials) syllabus

Texas A&M, an annual budget of $6.3 billion (FY2020), is the largest U.S. public university, one of only 60 accredited U.S. universities of the American Association of Universities (R1: Doctoral Universities – Highest Research Activity) and one of only 17 U.S. universities that hold the triple U.S. federal grant of Land, Sea, and Space!

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TaxFacts Intelligence Dec. 7, 2020

Posted by William Byrnes on December 7, 2020


Well, it looks like there will be a work-around for the SALT cap that was enacted under the Trump tax reform bill, at least for taxpayers who own pass-throughs. The IRS has officially announced that those pass-through entities can pay (and then deduct) the SALT taxes above the $10,000 limit.  Also, those who took our PPP loans for $2 million or more are getting a rather detailed questionnaire from the SBA inquiring about the economic necessity of those loans. Recall that PPP loans of less than $2 million are presumed to be requested in good faith, so this doesn’t apply to those borrowers. Happy Thanksgiving (or Zoomsgiving)!

Prof. William H. Byrnes         Robert Bloink, J.D., LL.M.

IRS Offers Guidance on Covid-19 Era Qualified Transportation BenefitsWith so many employees working from home for the bulk of 2020, employees have begun to question whether they will lose their unused qualified transportation benefits.  Some employees are driving rather than using public transit–and others aren’t commuting at all.  The IRS recently released an information letter explaining that unused qualified transportation benefit amounts can be rolled over to subsequent periods and used for future commuting expenses.  To qualify, the employee must have made a valid compensation reduction election and remain employed by the employer in the subsequent period.  Further, the IRS confirmed that unused amounts could be applied to other types of qualified transportation benefits, including parking, if the employer offers that benefit.  On the other hand, the IRS noted that refunds of unused qualified transportation benefits are not permitted if those benefits are provided through a compensation reduction agreement.  For more information on qualified transportation benefits, visit Tax Facts Online.  Read More

SBA Issues PPP Loan Necessity Questionnaires to PPP Loan RecipientsIn a surprise move, the SBA has begun asking paycheck protection program (PPP) lenders to issue loan necessity questionnaires to recipients of loans of at least $2 million.  The questionnaires are detailed and request significant information, and were issued without warning or fanfare.  It’s expected that these information requests might be used in enforcement of PPP loan requirements or in determining eligibility for forgiveness.  According to the SBA, the forms will be used to evaluate whether a recipient’s loan was made necessary by economic uncertainty.  Information provided in the forms must be certified under threat of criminal action for false statements.  The questions essentially ask borrowers to certify actual detrimental economic impact.  Borrowers will also have to provide information about local Covid-19 shutdown orders, other CARES Act aid, financial information and compensation to highly compensated owners and employees.  Upon receipt, the borrower has only 10 days to complete the questionnaire and submit supporting documents.  For more information on the PPP loan program, visit Tax Facts Online.  Read More

IRS Regs Bless SALT Cap Workarounds for Pass-Through EntitiesThe IRS has released regulations confirming that partnerships and S corporations who pay entity-level taxes at the state level can deduct those taxes on their federal income tax returns.  By now, most people are familiar with the $10,000 SALT deduction cap created by the 2017 tax reform legislation.  High-tax state governments have attempted to create workarounds that would allow taxpayers to get around this cap.  At the individual level, the IRS has responded to shut those efforts down.  The recent regulations confirm, however, that the entity is permitted the deduction for state-level taxes even if the entity could have elected to pass the tax liability through to the actual individual owners.  For more information on the SALT cap, visit Tax Facts Online.  Read More

Texas A&M University School of Law’s online wealth and international tax risk management graduate curricula for industry professionals has attracted over 160 enrollment this fall semester. Apply now for courses that begin on January 19 spring semester. See the international tax course list by > weekly topic here. <

Texas A&M, annual budget of $6.3 billion (FY2020), is the largest U.S. public university, one of only 60 accredited U.S. universities of the American Association of Universities (R1: Doctoral Universities – Highest Research Activity) and one of only 17 U.S. universities that hold the triple U.S. federal grant of Land, Sea, and Space!

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TaxFacts Intelligence December 3, 2020

Posted by William Byrnes on December 3, 2020


This week, we examine the new October regs (subscribers received this analysis the next day) on the process of establishing an ABLE account. The new rules provide increased flexibility in terms of who can establish the account, which may be an important factor when support for the beneficiary comes from multiple family members. We also have additional clarification on the Small Business Exemption to the Business Interest Deduction rules and a new online resource from the IRS that assists those who are closing a business. . .

Prof. William H. Byrnes         Robert Bloink, J.D., LL.M.

Final ABLE Account Regulations Offer New Flexibility

The IRS final ABLE account regulations broaden the range of parties who are eligible to establish an account.  Under the new rules, the beneficiary can designate any person to establish an account on their behalf.  If the beneficiary is unable to designate a person, the account can be set up by an agent under a power of attorney, a conservator, legal guardian, spouse, parent, sibling, grandparent or representative payee appointed by the Social Security Administration (in that order of priority).  The ABLE program itself is entitled to rely upon the person’s certification that he or she is authorized to set up the account for the benefit of a disabled person, and that there is no person with a higher priority who is willing and able to set up the account.  Similarly, the person who establishes the account will generally have signature authority over the account.  For more information on the ABLE Account rules, visit Tax Facts Online. Read More

IRS Clarifies Small Business Exemption to Business Interest Deduction Rules

The 2017 tax reform legislation changed the general rules for deducting business interest.  While the 2020 CARES Act relaxed the new limitations, the new rule generally limits the business interest deduction.  Small businesses that are not tax shelters are not subject to the new limits if they pass the gross receipts test (by having average annual gross receipts of no more than $26 million for the past three tax years).  Related entities are generally aggregated if they’re aggregated for other tax code purposes.  In past years, some small businesses were uncertain whether they fell into the definition of “tax shelter” because there was some uncertainty in the way “syndicate” was defined–multiple definitions apply in different tax code sections.  The IRS clarified this by releasing proposed regulations specifying that “syndicate” is defined using the Treasury Regulation Section 1.448-1T(b)(3) definition.  Because of this, only small businesses that have passive investors who are actually allocated losses are treated as tax shelters that are ineligible.  For more information, visit Tax Facts Online. Read More

IRS Creates Online Resource for Closing a Business

Unfortunately, many small business owners have been forced to close due to the economic fallout of the Covid-19 pandemic.  The IRS has now created an online resource giving business owners step-by-step information about how to close a business.  The website reminds taxpayers that they are required to file a final tax return for the year the business closes.  The relevant form will depend upon the type of business entity involved.  Employers are also required to pay employees all compensation that they’re owed—and must pay related employment taxes on those wages.  They must also report any payments in excess of $600 made to independent contractors.  The business should also close all business accounts and cancel their EIN by sending a letter to the IRS.  For more information on the tax obligations of employers, visit Tax Facts Online. Read More

Texas A&M University School of Law’s online wealth and international tax risk management graduate curricula for industry professionals has attracted over 160 enrollment this fall semester. Apply now for courses that begin January 11 spring semester. See the international tax course list by > weekly topic here. < Texas A&M, annual budget of $6.3 billion (FY2020), is the largest U.S. public university, one of only 60 accredited U.S. universities of the American Association of Universities (R1: Doctoral Universities – Highest Research Activity) and one of only 17 U.S. universities that hold the triple U.S. federal grant of Land, Sea, and Space!

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TaxFacts Intelligence December 1, 2020

Posted by William Byrnes on December 1, 2020


This week we analyze important end of tax year issues for businesses and Social security recipients. First, the SBA has announced a new streamlined forgiveness application for PPP loans of $50,000 or less (which is most of them). This is important for both the businesses that received the PPP funds and for the banks that will have to process the forgiveness applications; both should see their workloads greatly reduced. We also see the new Social Security COLA numbers for 2021, which as expected do not contain any dramatic changes.

Prof. William H. Byrnes         Robert Bloink, J.D., LL.M.

Streamlined PPP Loan Forgiveness for Small Loans

Many small businesses that received Paycheck Protection Program (PPP) loans are now near or past the end of their “covered period”–meaning that it’s time to apply for loan forgiveness.  Determining eligibility for loan forgiveness is much more complex than expected.  The Small Business Administration (SBA) has released a streamlined application that can be used by business owners who borrowed $50,000 or less.  For more information on the PPP loan program, visit Tax Facts Online. Read More

2021 Inflation-Adjusted Limit for Excepted Benefit HRAs

In 2019, the IRS created a new “excepted benefit” HRA structure.  Unlike the also-new individual coverage HRAs, employers can offer both the excepted benefit HRA and group health insurance coverage to the same employee.  The employee is not required to actually enroll in the group health coverage. For 2021, the contribution limit for these savings vehicles is $1,800 per year. For more information on the new HRA rules, visit Tax Facts Online. Read More

2021 Cost-of-Living Adjustments for Social Security Recipients

The Social Security Administration has announced the cost of living adjustments applicable for 2021, including a 1.3 percent increase in monthly benefits paid to Social Security recipients (the COLA increase for 2020 was 1.6 percent). Social Security “COLA” adjustments are tied to the consumer price index each year.  Based on the 1.3 percent increase, it is estimated that the annual Social Security earnings cap will be increased from $137,700 to $142,800 for 2021.  For more information on the Social Security tax, visit Tax Facts Online. Read More

Texas A&M University School of Law’s online wealth and international tax risk management graduate curricula for industry professionals has attracted over 160 enrollment this fall semester. Apply now for courses that begin on January 18 spring semester. See the international tax course list by > weekly topic here. < Texas A&M, annual budget of $6.3 billion (FY2020), is the largest U.S. public university, one of only 60 accredited U.S. universities of the American Association of Universities (R1: Doctoral Universities – Highest Research Activity) and one of only 17 U.S. universities that hold the triple U.S. federal grant of Land, Sea, and Space!

  • Rank 11th “Best Public Colleges” Money’s Best Colleges Report, 2019
  • Texas A&M ranks #1 in Texas, #1 in the SEC, and #12 in the U.S. in Washington Monthly’s 2020 overall college rankings based on the quality of education, accessibility, graduation rates, student involvement, and research: see tx.ag/WashMonth20

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