The American Institute of CPAs (AICPA) has made clear in a Jan. 29 letter to IRS and Treasury officials that guidance is needed on certain provisions in the newly passed law known as the Tax Cuts and Jobs Act (TCJA), and that includes compliance on accounting method changes.
“We have highlighted some of the specific areas that need immediate guidance in order for taxpayers and practitioners to comply with their 2017 tax obligations and to make informed decisions regarding cash-flow, entity structure, retirement, wealth transfer and a vast number of other tax planning issues,” wrote Annette Nellen, chairperson of the AICPA’s Tax Executive Committee.
She cites three key issues:
- Under Section 199A, guidance is needed on how to define specified service trade or business, how that section interacts with other code sections and the calculation of Section 199A deductions for complex business structures.
- Under Section 481, guidance is needed for making accounting method changes to comply with the new law.
- Penalty relief for underpayment of taxes is needed. “Taxpayers and preparers need sufficient time to determine the appropriate withholding and estimated tax payments for businesses, individuals, trusts, estates and other entities that may have a dramatically different tax liability in 2018 or that are affected by provisions effective for 2017,” Nellen wrote. She notes the need for penalty relief for estimated tax payments due Jan. 15 for the 2017 tax year, because taxpayers may have a significant difference in taxes owed because of the transition tax under Section 965. That section fails to provide sufficient guidance to properly calculate the estimated tax payments that were due in January if those were based on 90 percent of the estimated 2017 tax, she states.
But Nellen also listed dozens more sections that need clarification, listed in numerical order by Internal Revenue Code section, with a corresponding reference to the section in the new law.
Here’s the list, which omits the three key issues addressed above (see the above link for specific details):
- IRC Section 45S: Employer Credit for Paid Family and Medical Leave (TCJA Sec. 13403)
- IRC Section 59A – Base Erosion and Anti-Abuse Tax (TCJA Sec. 14401)
- IRC Section 132(g) – Suspension of Exclusion for Qualified Moving Expense Reimbursement (TCJA Sec. 11048)
- IRC Section 149(d) – Repeal of Advance Refunding Bonds (TCJA Sec. 13532)
- IRC Section 162(m) – Modification of Limitation on Excessive Employee Remuneration (TCJA Sec. 13601)
- IRC Section 163(h) – Limitation on Deduction for Qualified Residence Interest (TCJA Sec. 11043)
- IRC Section 163(j) – Limitation on Deduction for Interest (TCJA Sec. 13301)
- IRC Section 163(k) – Applicable Recovery Period for Real Property (TCJA Sec. 13204)
- IRC Section 164 – Limitation on Deduction for State and Local, etc. Taxes (TCJA Sec. 11042)
- IRC Section 168 – Temporary 100% Expensing for Certain Business Assets (TCJA Sec. 13201)
- IRC Section 179 – Modification of Rules for Expensing Depreciable Business Assets (TCJA Sec. 13101)
- IRC Section 250 – Deduction for Foreign-derived Intangible Income and Global Intangible Low-taxed Income (GILTI) (TCJA Sec. 14202)
- IRC Section 263A – Small Business Accounting Method Reform and Simplification (TCJA Sec. 13102)
- IRC Section 266 – Limitation on Deduction for State and Local, etc. Taxes (TCJA Sec. 11042)
- IRC Section 267A – Certain Related Party Amounts Paid or Accrued in Hybrid Transactions or with Hybrid Entities (TCJA Sec. 14222)
- IRC Section 280F – Temporary 100% Expensing for Certain Business Assets (TCJA Sec.13201).
- IRC Section 382 – Modification of NOL Deduction (TCJA Sec. 13302)
- IRC Section 448 – Small Business Accounting Method Reform and Simplification (TCJA Sec. 13102)
- IRC Section 451 – Certain Special Rules for Taxable Year of Inclusion (TCJA Sec. 13221)
- IRC Section 460 – Small Business Accounting Method Reform and Simplification (TCJA Sec. 13102)
- IRC Section 471 – Small Business Accounting Method Reform and Simplification (TCJA Sec. 13102)
- IRC Section 512 – Unrelated Business Taxable Income (UBTI) Separately Computed for Each Trade or Business Activity (TCJA Sec. 13702)
- IRC Section 512 – UBTI Increased by Amount of Certain Fringe Benefit Expenses for Which Deduction is Disallowed (TCJA Sec. 13703)
- IRC Section 951A – Current Year Inclusion of GILTI by U.S. Shareholders (TCJA Sec. 14201)
- IRC Section 958 – Modification of Stock Attribution Rules for Determining Status as a Controlled Foreign Corporation (CFC) (TCJA Sec. 14213)
- IRC Section 960 – Repeal of Section 902 Indirect Foreign Tax Credits; Determination of Section 960 Credit on Current Year Basis (TCJA Sec. 14301)
- IRC Section 965 – Treatment of Deferred Foreign Income Upon Transition to Participation Exemption System of Taxation (TCJA Sec. 14103)
- IRC Section 965(f) – Guidance on Shareholder Basis and AAA (TCJA Sec. 14103)
- IRC Section 1371(f) – Modification of Treatment of S Corporation Conversion to C Corporations (TCJA Sec. 13543)
- IRC Section 1502 – 21% Corporate Tax Rate (TCJA Sec. 13001)
- IRC Sections 2001(g) and 2010(c)(3) – Increase in Estate and Gift Tax Exemption (TCJA Sec. 11061)
- IRC Section 3402 – Modification of Rates (TCJA Sec. 11001)
- IRC Section 4960 – Excise Tax on Excess Tax-Exempt Organization Executive Compensation (TCJA Sec. 13602)
- IRC Section 4968 – Excise Tax Based on Investment Income of Private Colleges and Universities (TCJA Sec. 13701)