2019 Tax Act Effects on Tax-Exempt Organizations; Required Section 501(c)(4) Notices

Posted in GT Alert, Internal Revenue Code, IRS, Tax Cuts and Jobs Act, tax-exempt organizations

The Tax Cuts and Jobs Act included a provision increasing taxes on tax-exempt organizations. New Internal Revenue Code Section 512(a)(7) required that tax-exempt organizations include in computing unrelated business taxable income any amount incurred by the tax-exempt organization (i) for any qualified transportation fringe benefit for an employee (generally, costs of mass transit passes and parking near the employer place of business), (ii) any parking facility used by employees, or (iii) any on-premises athletic facility used by employees, in each case to the extent that such amounts would not have been deductible by the tax-exempt organization if it were a for-profit organization.

The impact of Code Section 512(a)(7) was to impose tax on the amount of these fringe benefits provided to employees on organizations that might otherwise be exempt from income tax. Religious organizations that previously were not required to file federal income tax returns were required under this Code provision to file income tax returns to report and pay tax. Many tax-exempt organizations lobbied extensively to have this tax repealed. Organizations argued that this was unfair to charitable organizations and diverted money away from charitable activities.

This lobbying by tax-exempt organizations was successful.

Read the full GT Alert.

AB 5, California’s Gig-Work Law, Could Mean Inconsistent Federal and State Tax Treatment for Workers

Posted in California, GT Alert, Labor & Employment, State Tax

On Sept. 18, 2019, Governor Gavin Newsom signed Assembly Bill No. 5 (AB 5) into law in California. The landmark legislation, which came into effect Jan. 1, 2020, promises to significantly expand the number of workers treated as employees for state tax and labor purposes. Although the legislation was aimed at participants in the “gig economy” (i.e., freelancers) it has much broader application. Early estimates suggest that as many as one million workers in California will be affected by this legislation. Moreover, for some businesses, it may result in workers having an inconsistent treatment for federal and state purposes.

Under the prior law, California’s Employment Development Department (EDD) and courts would apply an 11-factor analysis from S.G. Borello & Sons, Inc. v. Department of Industrial Relations to determine whether a worker should be classified as a worker or independent contractor. AB 5 codifies the three-part test for determining independent contractor status as established in Dynamex Operations West, Inc. v. Superior Court.

Read the full GT Alert.

Qualified Opportunity Zones – Final Treasury Regulations Released

Posted in GT Alert, IRS, Opportunity Zones, qualified opportunity funds, qualified opportunity zones, Real Estate, Tax Cuts and Jobs Act

On Dec. 19, the United States Department of the Treasury released final regulations related to investment in Qualified Opportunity Zones and Qualified Opportunity Funds (544 pages). These highly anticipated regulations and related guidance provide critical information to investors, Qualified Opportunity Funds (QOFs), and project sponsors/operators involved in real estate, venture capital, operating businesses, and project finance in Qualified Opportunity Zones (QOZs). Many provisions of two rounds of prior proposed regulations were finalized or amended, and new provisions and guidance offer further clarity in areas critical for investor evaluation.

Greenberg Traurig has broad experience working with clients in QOF fund formation and investor utilization of QOZ benefits, along with sponsor, developer, and operator project qualification under this emerging tax incentive program for economic revitalization.

Click here for the full GT Alert, which summarizes the final regulations. Stay tuned for our detailed analysis and webinars describing the impact of these new regulations.

In the Zone: GT Qualified Opportunity Zone News – December 2019

Posted in Congress, Opportunity Zones, qualified opportunity funds, qualified opportunity zones

Welcome to In the Zone: GT Qualified Opportunity Zone News. Our monthly digest of the latest federal and state developments in Qualified Opportunity Zones and Qualified Opportunity Funds and related Greenberg Traurig news and events will keep stakeholders apprised of the most pressing issues in this burgeoning space. Continue Reading

Final IRS Guidance for Rental Deduction Still Leaves Triple Net Leases Out in the Cold

Posted in IRS, Real Estate, real estate tax, Tax Cuts and Jobs Act

Many real estate investors hoping for clarity on whether they will be eligible for the tax break for pass-through entities under the Tax Cuts and Jobs Act (TCJA) will be disappointed that guidance from the Internal Revenue Service (IRS) will not help much for projects leased on a triple-net basis. Read Marvin A. Kirsner’s article for the Daily Business Review, “Final IRS Guidance for Rental Deduction Still Leaves Triple Net Leases Out in the Cold.” (subscription).

Greenberg Traurig’s Barbara Kaplan, Michelle Ferreira, and Jennifer Vincent Featured in Law360

Posted in Charitable Planning, IRS, Real Estate, real estate tax

Law360 recently published an article by Greenberg Traurig’s Barbara T. Kaplan, Michelle Ferreira, and Jennifer Vincent, titled “Prepare For Greater IRS Scrutiny On Conservation Easements.” While the Internal Revenue Service has been focused on syndicated conservation easements for over 10 years, earlier this year IRS Commissioner Chuck Rettig announced several campaign issues on which the IRS would heighten its focus. These campaigns included compliance in the areas of cryptocurrency, syndicated conservation easements, captive insurance companies, offshore filings and more. To read the full article, please click here.

Syndicated Conservation Easements: Under New Fire as IRS Enforcement Action Increases

Posted in Charitable Planning, GT Alert, Internal Revenue Code, Investing, IRS, Real Estate, real estate tax, tax audits

While the IRS has been cracking down on syndicated conservation easements for over ten years, earlier this year Chuck Rettig, the Commissioner of the IRS, announced several campaign areas upon which the IRS would heighten focus in the coming year. Following through on this promise, on Nov. 12, 2019, the IRS announced a significant increase in enforcement actions for syndicated conservation easements in Issue Number IR-2019-182. This GT Alert explains what a syndicated conservation easement is and discusses how the IRS is now throwing significant resources behind the hunt for these transactions.

Click here for the full GT Alert.

New York Issues Sales Tax Guidance for Businesses With No Physical Presence in the State

Posted in Sales Tax, State Tax

In South Dakota v. Wayfair, Inc., et al., 138 S. Ct. 2080 (decided June 21, 2018), the Supreme Court of the United States held that physical presence in a state was not necessary for retailers to be required to collect and remit state sales and use tax. Many states, including New York, have passed statutes implementing that decision. On Nov. 5, 2019, the New York State Department of Taxation and Finance issued TSB-M-19(4)S, providing guidance for businesses making sales of tangible personal property delivered in New York.

Click here to read the full alert, which provides details on the new guidance.

Greenberg Traurig Amsterdam advises InterXion on its USD 8.4 Billion Combination with Digital Realty

Posted in Firm News

The Amsterdam office of global law firm Greenberg Traurig, LLP represented InterXion (NYSE: INXN), a leading European provider of cloud- and carrier-neutral colocation data center services, in a business combination with Digital Realty (NYSE: DLR). The transaction values InterXion at approximately USD 93.48 per share or USD 8.4 billion of total enterprise value in an all-stock deal, based on Digital Realty’s closing price on Monday.

This strategic transaction is the largest in the history of the data center industry and will position the combined company as a leading global provider of data center solutions with enhanced presence in major European metropolitan areas.  Completion of the transaction is subject to customary closing conditions, including approval by shareholders of InterXion and Digital Realty.

Read more about the deal here or on TheDeal.com (subscription required).

IRS Issues New Cryptocurrency Guidance

Posted in Blockchain, cryptocurrency, IRS

On Oct. 9, 2019, the Internal Revenue Service (IRS) released revenue ruling (Rev. Rul. 2019-24) and a Frequently Asked Questions (FAQs) document, which provide additional guidance on the tax treatment and reporting obligations for transactions involving virtual currency (also known as cryptocurrency). This guidance supplements the original guidance that was issued in 2014 in the form of a notice (Notice 2014-21), which provides a baseline rule that cryptocurrency is property for federal income tax purposes.

Rev. Rul. 2019-24 addresses questions related to the tax treatment of hard forks. The revenue ruling describes a hard fork as a protocol change that results in a permanent split of a new distributive ledger from a legacy or existing distributed ledger, resulting in the creation of a new cryptocurrency on the new distributed ledger in addition to the legacy cryptocurrency on the legacy distributed ledger.  Continue Reading

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