Bramwell's Lunch Beat: Solar Tax Credit, G-20 Eyes Taxes, Sanders Not Ike

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Jason Bramwell
Staff Writer and Editor
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Will solar energy plummet if the investment tax credit fades away?
At the end of next year, the 30 percent investment tax credit for solar and other renewable power is set to expire for residential systems and plunge to 10 percent for commercial installations. Boosters are calling for Congress to extend the credit in its current form. The tax-credit crunch is looming at a time when solar is on the rise. Solar installations increased 30 percent last year, thanks partly to cheaper photovoltaic panels. In a point-counterpoint article for the Wall Street Journal, Amit Ronen, director of the GW Solar Institute and a professor at the Trachtenberg School of Public Policy at George Washington University, argues that the end of the 30 percent credit will send solar off a cliff. John Farrell, director of the Democratic Energy initiative at the Institute for Local Self-Reliance, says the impact of the tax credit is overstated and the solar market will continue to rise.

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G-20 leaders set to approve overhaul of corporate tax rules
A push to close international corporate tax loopholes is expected to spur competition for lower rates overseas and increase pressure in Washington for a bipartisan deal to revamp the corporate tax code, wrote Paul Hannon and Richard Rubin of the Wall Street Journal. Leaders from the Group of 20 largest economies, meeting in Turkey, are set to give their final stamp of approval to a major overhaul of the international rules governing corporate taxes. The change is aimed at preventing companies from using myriad tactics to shift profits among different jurisdictions to avoid taxation. Such practices cost governments between $100 billion to $240 billion in lost revenue each year, according to the Organization for Economic Cooperation and Development. The new rules apply only to companies that operate in more than one country. Nations aren't required to adopt them, though they are expected to be put in place widely.

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Pfizer-Allergan deal refocuses market on US tax inversion rules
Pfizer Inc.'s buyout bid for Allergan PLC has financial markets on edge over a possible new move by the US Treasury Department against tax inversion deals, wrote Kevin Drawbaugh of Reuters. For months, Treasury has offered no fresh guidance on the inversion issue, leaving tax experts to speculate about what could come next. Possible steps the government might take include tightening the rules on two strategies related to inversions, tax experts said: “earnings stripping” and “skinny down” distributions. Tighter earnings-stripping rules would curtail a key attraction of inversions, but Treasury has struggled to write such a rule within the constraints of present law, experts said. Fresh legislation from Congress on inversions is regarded as unlikely before the 2016 elections. “The rhetoric is heating up over Pfizer, but I don't see anything immediate on the horizon,” said Edmund Outslay, a tax accounting professor at Michigan State University.

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Sanders: I won't hike taxes like Ike
Gregory Krieg of CNN wrote that Democratic presidential candidate Sen. Bernie Sanders (I-VT) hasn't decided just how much he wants to raise taxes, but he is promising “it will not be as high as the number under Dwight D. Eisenhower, which was 90 percent.” During Saturday's Democratic presidential debate in Des Moines, Iowa, Sanders said to laughs that he is “not that much of a socialist, compared to Eisenhower.”

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IRS technical guidance roundup (week of Nov. 9)
The IRS issued the following technical guidance last week:

Notice 2015-78 provides guidance regarding qualified student loan bonds under § 144(b) of the Internal Revenue Code to clarify certain requirements for tax-exempt bond financing for loan programs of general application approved by a state under § 144(b)(1)(B) (State Supplemental Loan programs).

Notice 2015-80 provides guidance on the corporate bond monthly yield curve, the corresponding spot segment rates used under § 417(e)(3), and the 24-month average segment rates under § 430(h)(2) of the Internal Revenue Code.

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