Table Of Content

CUMULATIVE INDEX verse Subpart F income consequences) regard to whether such application has which the war loss deduction under nor engaged in a U.S. trade or business any current U.S. tax consequences. In section 127 of the 1939 Code was com- (which may trigger effectively con- the case of transfers that are wholly puted, had to be decreased by allow- nected income). If both the purchaser outside the U.S. tax system, section able depreciation attributable to the and the target are foreign, however, 362(e)(2) applies but does not have period during which the taxpayer was and neither corporation has any con- relevance unless and until the assets a nonresident alien of the U.S. “The nection to the U.S. tax system, the po- transferred or the stock received in the contrary view [of not reducing basis tential U.S. tax benefits that may be re- exchange enter the U.S. tax system.” for depreciation] would discriminate alized from the resulting basis step-up (Emphasis added.) in favor of nonresident aliens owning may never become relevant. Another example of how the appli- property abroad as against resident cation of U.S. tax principles to non- taxpayers in identical situations. In the Negative implications. As noted U.S.-situs assets can have adverse U.S. absence of a clear statutory command above, applying U.S. tax principles to tax consequences is illustrated by to that effect, we cannot assume that non-U.S. assets prior to entering the GCM 39291, 9/24/84. In the GCM, the Congress intended any such discrimi- U.S. tax system may not always result IRS questioned whether a foreign cor- nation.” (For an excellent discussion of in favorable U.S. tax consequences. Re- poration that placed two drilling rigs the applicability of U.S. depreciation cent guidance confirming this notion in service outside of the U.S. prior to principles to non-U.S. taxpayers, see is contained in the Preamble to the re- using the drilling rigs in a U.S. trade or Voce, “Basis of Foreign Property That cent Proposed Regulations under Sec- business was subject to accelerated de- Becomes Subject to U.S. Taxation,” 49 tion 362(e)(2) (REG-110405-05, preciation determined under U.S. tax Tax Lawyer No. 2 (Winter 1996), page 10/20/06). principles. Citing Reg. 1.1016-4(a)(2), 341.) In general, Section 362(e)(2) pre- the IRS specifically concluded that the In summary, AM 2007-006 illus- vents a taxpayer from duplicating a taxpayer's “basis in its two drilling rigs trates that the ability to apply U.S. tax loss when vuilt-in loss assets are trans- must be adjusted to reflect deprecia- principles to non-U.S. assets before ferred as part of a Section 351 transaction actually sustained in [the foreign those assets enter the U.S. tax system tion. If Section 362(e)(2) is applicable, country] when it was not subject to can result in significant tax benefits in the taxpayer is required to step down U.S. income tax,” so long as the amount the appropriate situation. As indicated the basis of certain assets, obviously of the depreciation adjustment was above, however, given that the applica- not a taxpayer-friendly result. (See considered “reasonable.” tion of these principles also can work generally Rubinger and Greenwald, Similar results were reached in Ltr. against taxpayers in a variety of situa- “Section 362(e)(2) Proposed Regula- Rul. 8438058 as well as in TAM tions, it is prudent to consider both tions Provide Clarity and Planning 8749008, although with slightly differ- sides of the equation. Opportunities,” 106 JTAX 111 (Febru- ent analysis. See also Gutwirth, 40 TC Shop Talk thanks Mr. Rubinger for ary 2007).) The Preamble states that 666 (1963), acqg., in which the Tax his observations and invites our read- “[u]nder general principles of law, the Court held that the amount of the ad- ers to share their experiences with “rel- Code applies to all transactions without justed basis of damaged property, on evance” for U.S. tax purposes. CUMULATIVE INDEX This index covers material in THE JOURNAL OF TAXATION, Volume 106, January-June 2007. Indexes are published twice annually, in June and December. ACCOUNTING and adds some enhancements, by Christine Kachinsky, CORPORATIONS, SHAREHOLDERS Correction limits losses or deductions used in caiculat- Frances Leibasnd kDaveidr P.,C u lp, 106 JTAX 133, Mar07 New Prop. Regs. on Section 355 active trade or business ing Section 199 deduction, 106 JTAX 67, Feb07 Use of negative amounts under simplified UNICAP requirement, 106 JTAX 324, June07 Final Regs. take narrow approach to what revenues methods, 106 JTAX 196, Apr07 Section 362(e)(2) Proposed Regulations provide from online software qualify for Section 199, 106 COMPENSATION & BENEFITS clarity and planning opportunities, by Jeffrey I JTAX 195, Apr07 Congress makes health savings accounts more attrac- Rubinger and Lewis J. Greenwald, 106 JTAX 111, LILO transaction upset by district court on motion for tive to employers, employees, by Stanley D. Baum, 106 Feb07 summary judgment in BB & T, by Richard M. Lipton, JTAX 159, Mar07 Signing date rule remains where there is fixed consider 106 JTAX 141, Mar07 Employer deduction of payroll tax liability for deferred ation in reorganizations, 106 JTAX 196, Apr07 Maximizing the domestic manufacturing deduction for comp. not controlled by Section 404, 106 JTAX 131, ESTATES, TRUSTS, & GIFTS media businesses, by Christian M. McBurney, 106 JTAX Mar07 Estate planning for noncitizens and nonresident aliens: 12, Jan07 Final Regs. under the new Section 409A nonqualified What were those rules again?, by Diana S.C. Zeydel and More choices than ever are now available under the deferred comp. rules, 106 JTAX 259, May07 Grace Chung, 106 JTAX 20, Jan07 nonaccrual experience method, by W. Eugene Seago, Guidance on PPA changes to Section 404 rules on de- Fees for investment management: What percentage is 106 JTAX 207, Apr07 duction for plan contributions, 106 JTAX 198, Apr07 deductible by estates and trusts?, by David A. Berek, New guidance on domestic production deduction af- IRS issues guidance on new HSA transfer rules,b y Stan- 106 JTAX 272, May07 fects pass-throughs and sampling methods, 106 JTAX ley D. Baum, 106 JTAX 246, Apr07 Gift-splitting—a boondoggle or a bad idea? A compre- 323, June07 IRS issues guidance on Pension Protection Act’s distrib- hensive look at the rules, by Diana S.C. Zeydel, 106 New tables for Section 280F limitations on depreciation ution provisions, 106 JTAX 67, Feb07 JTAX 334, June07 for auto owners and lessees, 106 JTAX 261, May07 Planning to avoid excess golden parachute payments, by Grantor trust ignored for life insurance transfer-for- New tax act extends the research credit retroactively (again) Avi M. Lev, 106 JTAX 167, Mar07 value purposes, 106 JTAX 131, Mar07 JOURNAL OF TAXATION 8 JUNE 2007 SZ 383 CUMULATIVE INDEX IRS can't require bond or special lien in every deferred Lessee’s treatment of construction allowances for short plicitly clarify some issues, by Richard M. Lipton, 106 estate tax payment case, 106 JTAX 264, May07 term lease of retail space, 106 JTAX 307, May07 JTAX 265, May07 Prop. Regs. would look to post-death events affecting Merger of social welfare organization into public chari- SHOP TALK claims against the estate, 106 JTAX 262, May07 ty had no adverse tax consequences, 106 JTAX 60, “Active inducement” of patent infringement construed Jan07 EXEMPT narrowly, 106 JTAX 255, Apr07 Perpetual stewardship easement was of like-kind to fee International giving and the fight against terrorism: A Are partners’ guaranteed payments subject to double interest in real estate, 106 JTAX 121, Feb07 clash of policies begets new rules, by Paul Carman and counting?, 106 JTAX 377, June07 Reformed trust not treated as CRUT, 106 JTAX 120, Kelley Bender, 106 JTAX 100, Feb07 California LLC fees: Another taxpayer victory, 106 JTAX Feb07 Major changes for exempt organizations in the Pension 126, Feb07 Restructuring to promote tracking of economic perfor- Protection Act of 2006, by MichaelA . Lehmann, 106 California refines its tax treatment of series LLCs, 106 mance was F reorganization, 106 JTAX 57, Jan07 JTAX 30, Jan07 ITAX 316, May07 Restructuring was subject to step transaction doctrine, Can taxpayers self-impose the anti-abuse rules?, 106 FRAUD & NEGLIGENCE 106 JTAX 183, Mar07 JTAX 186, Mar07 FBAR—foreign bank account reporting obligations: A Return of deferred taxes and credits violated normal- Controversy continues for tax-related patents, 106 JTAX primer for the practitioner, by Kevin E. Packman and ization rules, 106 JTAX 124, Feb07 379, JuneO7 Andrew H. Weinstein, 106 JTAX 44, Jan07 Service grants subsidiary request for ruling on consoli- Dirty dozen, part VI: IRS identifies five new ways IRS clarifies rules for disclosing tax shelter penalties in dation, 106 JTAX 119, Feb07 “scamsters” go after taxpayers, 106 JTAX 190, Mar07 SEC filings other than Form 10-K, 106 JTAX 198, Settlement proc ds treated as excludable gain on sale Goodie bags, R.I.P.?, 106 JTAX 127, Feb07 Apr07 of principal residence, 106 JTAX 251, Apr07 Is it ever really safe to rely on IRS acquiescences?, 106 IRS identifies “frivolous” positions subject to penalties, Spinoff was not a redemption between related parties JTAX 254, Apr07 106 JTAX 197, Apr07 but resulted in a deductible loss, 106 JTAX 185, Mar07 Is Wikipedia good authority in the Tax Court?, 106 JTAX Klamath dispatches another tax shelter, but without Stock traded on OTCBB and contributed to private 256, Apr07 penalties, by Richard M. Lipton, 106 JTAX 200, Apr07 foundation was qualified appreciated stock, 106 JTAX Partnership anti-abuse rules: Agents will apply, courts Prohibited conduct under Circular 230: IRS issues 312, May07 may deny, 106 JTAX 314, May07 guidance on monetary penalties, 106 JTAX 259, Taxpayer allowed to revoke election out of installment May07 sale treatment, 106 JTAX 119, Feb07 Prize in the skies won't work, tax-wise, 106 JTAX 188, Mar07 lemporary deconsolidation of subs did not trigger de- INTERNATIONAL Protecting taxpayers’ personal data: Do as IRS says, not ferred intercompany items, 106 JTAX 122, Feb07 Anti-loss-reimportation rules toughened for consoli as it does!, 106 JTAX 319, May07 liming of foreign sales corporation overall profit per- dated groups, 106 JTAX 260, May07 “Relevance” in the international context—applying U.S. centage grouping election, 106 JTAX 310, May07 Final Regulations on foreign tax credit allocations: tax principles to non-U.S. assets, 106 JTAX 381, Tribe’s use of bond proceeds for other than essential Planning is still possible, by Richard M. Lipton, Todd June07 government function precluded exempt interest, 106 Golub, and John (Jay) Soave III, 106 JTAX 78, Feb07 Tax consequences of Opran’s “favorite giveaway ever,” ITAX 252, Apr07 Net consideration method can be used for qualified 106 JTAX 63, Jan07 patent cross-licensing arrangements, 106 JTAX 132, U.S. tax treatment of financial instruments issued Top ten provisions of TRHCA 2006, 106 JTAX 128, among a U.S. corporation and foreign entities it con- Mar07 Feb07 trolled, 106 JTAX 57, Jan07 Portfolio interest exclusion clarified, 106 JTAX 261, Update on FBAR developments—new enforcement ef- May07 PARTNERSHIPS, $ CORPORATIONS, & LLCs forts likely, 106 JTAX 318, May07 Section 987 Proposed Regulations: A new regime for Final Regs. on allocating liabilities to disregarded entity dealing with functional currency issues, by David partners, by Roger F. Pillow and Jeffrey A. Erickson, 106 SPECIAL INDUSTRIES Forst, 106 JTAX 90, Feb07 JTAX 69, Feb07 WHFIT reporting rules become robust but have signif- lransfer pricing Temp. Regs. on services and intangi- Obligations, liabilities, and construction partnerships: icant simplifying safe harbors, by Paul Carman and Stephen F. Lappert, 106 {TAX 232, Apr07 bles respond to taxpayer input,b y Henry J. Birnkrant, Regs. clear away a trap, by Gerald V. Thomas II and L. i106 JTAX 148, Mar07 1 ndrew Immerman, 106 JTAX 286, May07 STATE & LOCAL Iwo IRS Notices affect the foreign base company in- Partners’ claims in refund suit were barred by prior Tax lax issues in Indian country: A guide for practitioners, come of CFCs, 106 JTAX 68, Feb07 Court case at partnership level, 106 JTAX 262, May07 by Mark J. Cowan, 106 JTAX 296, May07 U.S. private equity funds making cross-border invest Prop. Regs. would limit abusive open account basis ad ments—primary tax considerations, by Arturo Re justments, 106 JTAX 263, May07 AUTHOR INDEX quenez II and Timothy S. Shuman, 106 JTAX 349, rhe Sixth Circuit affirms Littriello: Check-the-box Reg- Stanley D. Baum 159, 246 June07 ulations are upheld, by Thomas E. Rutledge and Scott E. Kelley Bender 100 David A. Berek 272 Ludwig, 106 JTAX 325, June07 LETTER RULINGS Henry J. Birnkrant 148 lhe Sixth Circuit vacates Tax Court’s Hubert Enterprises Active trade or business test satisfied in cross-border Vorris J. Blankenship 50, 216 decision on DROs, 106 JTAX 324, June07 forward triangular merger, 106 JTAX 374, June07 Paul Carman 100, 232 “Son of BOSS” update: Summary judgment on the Cancelled nonstatutory stock options did not count Grace Chung 20 tax liability in Cemco but no fraud in Sala, by against Section 162(m) limits, 106 JTAX 184, Mar07 Mark J. Cowan 296 Richard M. Lipton and Robert 8. Walton, 106 JTAX Claimed worthlessness of partnership interests belied Susan R. Crowe 277 by acts, 106 JTAX 184, Mar07 328, June07 David P. Culp 133 Class action settlement and related costs were ordinary PERSONAL Jeffrey A. Erickson 69 and necessary, 106 JTAX 182, Mar07 Maximizing medical deductions for residents of retire David L.F orst 90 Consequences of housing co-op corporation's conver ment communities, by Vorris J. Blankenship, 106 JTAX Todd Golub 78 sion to condominium, 106 JTAX 118, Feb07 50, Jan07 Lewis J. Greenwald 111 Conversion to LLC did not significantly modify corpo Proposed Regulations on the tax treatment of private L. Andrew Immerman 286 rate debt, 106 JTAX 373, June07 annuities would generally make them unattractive, by Christine Kachinsky 133 Dividend paid by U.S. sub to disregarded U.K. parent Alan S. Lederman, 106 JTAX 175, Mar07 Stephen F. Lappert 232 qualified for zero withholding under treaty, 106 JTAX lax issues complicaée the costs of chronic illness an¢ Alan S. Lederman 175 376, June07 long-term care insurance,b y Vorris J. Blankenship, 106 Michael A. Lehmann 30 ntity that failed to distribute risk of loss did not quali JTAX 216, Apr07 Frances Leibsker 133 ty as insurance company, 106 JTAX 59, Jan07 Avi M. Lev 167 PROCEDURE Former CEO incurred gross income in connection with Richard M. Lipton 4, 78, 141, 200, 265, 328 Hoamirecorwanfte rsu’se , a1s0s6o cJiTaAtiXo n'24s8 , taAxpr-0e7x empt status revoked, Ho1w2 btaon krreuqpuetscty ipnlcaonm,e 10t6a x JeTfAfXec ts3 , oJfa np07r oposed Chapter CScohtt rE.i sLuMdt.wi igM caBurnne y 32152 106 JTAX 251, Apr07 No interest on remittance taxpayer previously argued Kevin E. Packman 44 Income from liquidation payment for stock is “patron was a deposit rather than a payment, 106 JTAX 3 Roger F. Pillow 69 age-sourcedf”o r cooperative, 106 JTAX 249, Apr07 Jan07 Arturo Requenez I] 349 IRS considers special bank rules and their impact on Recent cases define the prohibition against tax collec Bruce M. Reynolds Sub S banks, 106 JTAX 61, Jan07 tion during refund suits,b y Bruce M. Reynolds and Su Jeffrey L. Rubinger IRS issues advice regarding treatment of wholesaler’s san R. Crowe, 106 JTAX 277, May07 Thomas E. Rutledge 325 rebates, 106 JTAX 307, May07 Service updates pre-filing agreement procedures, 106 W. Eugene Seago 207 IRiSn colpuidniensg “onc omamppelniscuartaitone ofw itShe ctiinocno me4”¢ stZzae ngdualradt,i on1s0,6 lrJeasTury6 A7,im XFperbo 0v7e s the disclosure regime by issuing new JToihmno t(hJya y) S$. SSohavuem anII I 34798 JTAX 375, JuneO7 femporary and Proposed Regulations, by Richard M. Gerald V. Thomas II 286 IRS reiterates earlier conclusion regarding variable pur Lipton and Robert S. Walton, 106 JTAX 4, Jan07 Robert S. Walton 4, 328 chase contract and share-lendir g agreement, 106 REAL ESTATE Andrew H. Weinstein 44 JTAX 309, May07 Favorable IRS rulings on related-party exchanges im Diana S.C. Zeydel 20, 334 384 A JOURNA OF TAXA @ JUNE 2007