On September 8, the Internal Revenue Service (IRS) released Notice 2023-63, providing much anticipated guidance on the application of Section 174. The Notice addresses key issues for handling specified research or experimental (SRE) expenditures that are capitalized and amortized in accordance with the Tax Cuts and Jobs Act (TCJA) changes to Section 174.  Taxpayers can apply the rules of Notice 2023-63 to tax years ending after September 8, 2023, or apply these rules to an earlier tax year beginning after December 31, 2021.Brooks Nelson, Partner and Strategic Tax Leader, and Sarah McGregor, Tax Director are joined by Tax Credit and Incentive Advisory Partners, Martin Karamon and Ron Wainwright, to discuss Notice 2023-63 and how this interim guidance clarifies certain questions about the application of Section 174.Listen to learn more about: 05:03 – Section 174 background07:54 – Who should pay attention to Notice 2023-6312:00 – Key terms in Notice 2023-63 15:40 – What Notice 2023-63 says about funded research 18:05 – Guidance on software development definition and activities21:01 – Effective dates and open questions under Notice 2023-63Related GuidanceRecent Legislation and Section 174 UpdatesSection 174 New Requirements and Its Impact on Technology CompaniesSection 174 Research & Software Development Costs – A Guide to ComplianceR&D Update: What’s Going On With Section 174?

When thinking about not-for-profit or tax-exempt organizations, abiding by strict tax rules is probably not top of mind. However, it is important for members of the board of directors and organization leaders to stay informed about tax laws, regulations, and Internal Revenue Service (IRS) reporting guidelines for not-for-profit organizations. Form 990 is the annual information return for most tax-exempt entities. The IRS uses Form 990 to collect information about the annual financial activity and good governance practices of the organization.Brooks Nelson, Partner and Strategic Tax Leader, and Sarah McGregor, Tax Director, speak with Paula Wendling, Tax Director with the Firm’s Not-For-Profit services team, about important tax rules that board members and leaders of not-for-profit organizations should be aware of before reviewing a  Form 990. Listen to learn more about:02:30 ­– What board members should think about when looking at Form 990 05:10 – Why the IRS asks for information and disclosures about compensation07:21 – Differences between private benefit and private inurement 10:15 – Conflicts of interest and transactions with interested parties12:10 – Differences between working with small and large organizations Related Guidance2023 Not-for-Profit Speaker Series: Tax Considerations for Alternative InvestmentsBenefits of Cloud-Based Accounting Software for Nonprofit OrganizationsWhat Board Members of Not-for-Profits Should Know about Taxes

Often, after much negotiation, debt may be reduced on various projects to realign debtor and equity holders' interests in properties. Property owners restructuring debt should be wary of tax consequences that could occur. Debt cancellation, foreclosures and short sales can often increase tax liability for cancellation of debt income.On this episode of the Tax Beat Podcast, Brooks Nelson, Partner and Strategic Tax Leader, and Sarah McGregor, Tax Director, discuss the tax cost and potential opportunities of cancellation of debt, particularly in the context of real estate transactions, with Laura Turner, Tax Partner, and Mark Cooter, Real Estate, Construction & Hospitality Industry Practice Leader. Listen to learn more about:02:35 - Basics of cancellation of debt and common occurrences 04:00 - Section 108 exceptions to recognizing income05:30 - Attribute reduction as it pertains to cancellation-of-debt (COD) income exclusion08:35 - Differences between short sales and debt modifications 12:07 - Advice for facing challenges during foreclosure conversations with lenders Related GuidanceMaking Informed Entity Selection for Real Estate OwnershipFinancing Capital Projects with the Use of New Markets Tax Credits

Wayfair v. South Dakota was a landmark case that clarified how sales tax is determined and collected. Brought about by a group of online retailers that challenged a South Dakota law, the case has had major impacts on how state and local jurisdictions throughout the U.S. establish physical presence or nexus. Since the initial ruling of the Supreme Court case, states have begun to set up their own sales tax laws.On this episode of the Tax Beat Podcast, Brooks Nelson, Partner and Strategic Tax Leader, and Sarah McGregor, Tax Director, discuss the Wayfair decision’s lasting impact with Cathie Shaw, State and Local Tax Practice Leader, and Lauren Stinson, Sales and Use Tax Team Leader.This conversation includes:Impressions of Wayfair v. South Dakota oral argumentsChanges over the last five yearsIndustry impacts of WayfairStates that have adopted economic nexusTechnology created to handle WayfairNexus enforcementImpact on income and franchise taxRelated GuidanceWhat Tech Companies Overlook in Sales Tax ReportingStart the Year Reviewing Your Economic Nexus ThresholdsThe Wayfair Decision – Three Years LatereCommerce Sales Tax Collection

Section 179D Energy Efficient Commercial Buildings Deduction (Section 179D) was significantly enhanced through the Inflation Reduction Act (IRA), offering commercial building owners and designers, like architects and engineers, potential lucrative tax credits. The tax credit rewards qualifying energy-efficient commercial buildings to encourage clean energy and offset the costs of the improvements.Energy Tax Credits & Incentives team members, Bill Harbeson, Manager, and Andre Kohn, Senior Associate, share their knowledge on Section 179D with Brooks Nelson, Partner and Strategic Tax Leader, and Sarah McGregor, Tax Director.Listen to this podcast episode to learn more about:The history of Section 179DHow Section 179D worksIRA updatesWhich projects Section 179D can be used for Section 179D client case studyQualification ProcessRelated GuidanceNew IRS Form 7205 for Returns Requiring Section 179D Documentation179D Energy Efficient Commercial Building Deduction Now in EffectUnderstanding the Expanded Benefits of Energy Tax Incentives Under 179D and 45LInflation Reduction Act Nearly Triples Section 179D Tax IncentivesGlobal A&E Firm Saves $2 Million with 179D Tax DeductionHow to Claim Section 179D Energy-Efficiency Tax Deduction: A Guide for Architects and Engineers

U.S. taxpayers that own or control certain foreign corporations, foreign partnerships or foreign trusts are required to disclose the activities, usually with forms attached to a tax return. If not reported timely or properly on the designated forms, these U.S. taxpayers may be subject to significant penalties. A recent Tax Court Ruling for Farhy v. Commissioner brought to light how the Internal Revenue Service (IRS) applies these penalties. The main issue argued whether the law actually grants the IRS the authority to assess and collect these penalties. Listen as Brooks Nelson, Partner and Strategic Tax Leader, and Sarah McGregor, Tax Director, are joined by Brian Dill, International Tax Leader, as they discuss:2:28 – Background Farhy v. Comm and Similar Taxpayer Challenges6:30 – Tax Court Ruling in Farhy Case8:55 – Penalties Impact from Ruling10:24 – Government Penalty Collection11:07 – Demand for Clear Statue of Limitations18:01 – Other Important Tax Court Rulings20:05 – Recommendations to Organizations with International Assets and OperationsOther Related GuidanceSupreme Court Issues Opinion in Bittner v. United States (FBAR Case)Importance of R&D Tax Credit Documentation: Lessons from Recent Court Cases

The Internal Revenue Service (IRS) made headlines this past year with the news that they would be receiving an additional $80 billion towards their budget over 10 years through the Inflation Reduction Act of 2022. With the IRS facing many of the same issues they have been dealing with for more than six decades, the question remains: what will be different this time? There has been much discussion as to how the IRS would utilize this budget increase to:Update technology infrastructure, Attract and retain talent,  Strengthen enforcement and taxpayer services, And more. Brooks Nelson, Partner and Strategic Tax Leader, and Sarah McGregor, Tax Director, talk with Anne Oliver, Tax Controversy Director, about the current state of the IRS and their potential future plans.Related GuidanceSupreme Court Issues Opinion in Bittner v. United States (FBAR Case)ERC Update: Tax Professional Responsibilities and IRS ExaminationsTransfer Pricing and Foreign Legal Restrictions: 3M Co. v Commissioner Ruling

On March 9, 2023, the Biden Administration released The President’s Budget for Fiscal Year 2024. It is currently unlikely that this budget proposal will become legislation, but it is important to recognize the tax revenue raises in this latest budget proposal. Parts of the latest proposed budget come from the drafted Build Back Better Act and early versions of the Inflation Reduction Act.In the latest episode of the Tax Beat Podcast, Brooks Nelson, Partner and Strategic Tax Leader, and Sarah McGregor, Tax Director, are joined by Ron Wainwright, Tax Credits & Incentives Advisory Partner, and Brian Dill, International Tax Leader. They will dive into the proposed tax changes, the likelihood of it becoming law, and the potential implications for business taxpayers.Related Guidance:R&D Update: What’s Going On With Section 174?2022 Year-End Tax Planning Strategies for Businesses

In July 2021, the Internal Revenue Service (IRS) formally introduced Schedules K-2 and K-3. These forms bring uniformity and consistency to reporting items of international tax relevance to partners and S corporation shareholders on the foreign activity of a partnership or S corporation. Unfortunately, Schedule K-3 can add up to 20 additional pages to a partner’s or shareholder’s Schedule K-1. Michael Elliot, Director with the Firm’s national tax team, joins this edition of the Tax Beat podcast with Brooks Nelson, Partner and Strategic Tax Leader, and Sarah McGregor, Tax Director, to share his insights on filing Schedule K-2 and K-3 for 2022. More importantly, Mike discusses the exceptions to the required filing of these forms for partnerships and S corporations. The podcast covers: 2021 Pushback on ReliefImportance of Filing Correctly2021 Relief Notice No Longer Effective for 2022Qualifying for the Domestic Filing ExceptionTiered Partnerships and Limited Foreign ActivityOpting in vs. Pursing an Exception to FilingK-3 Filing Difficulties Additional Guidance:Domestic Filing Exception for 2022 Schedules K-2 and K-3

State Credits & Incentives programs are offered by state governments to encourage economic development and investments in their state. These credits allow businesses an opportunity to reduce their tax burden, increase cash flow and make investments for growth and long-term success. All these credit and incentives programs are designed to benefit the local areas and give businesses an advantage in a competitive market.Melinda Young, State Credits & Incentives Director, and Nick Cousino, State Credits & Incentives Senior Manager, join Brooks Nelson, Partner and Strategic Leader, and Sarah McGregor, Tax Director, on this edition of the Tax Beat podcast to share insights on how your business can take advantage of these programs.Listen to learn more about:Background on the State Credits & Incentives PracticeCommonly Claimed State CreditsState Credits From Previous YearsState Credits TrendsInvestments and Job Creation With State CreditsImpact of Layoffs During COVID-19Minimum Business Investments to Benefit From State Credits & IncentivesSite Selection ServicesLocation Retention Incentives Impact of the Tax Cuts & Jobs Act (TCJA) On State Incentive Packages