Tax Talk: Volume 7, No. 2 July 2014

EDITOR'S NOTE

With the halfway mark of 2014 just behind us, we are pleased to share with you in this issue of Tax Talk some of the more noteworthy tax developments from Q2. The most important highlight of the past quarter from our neck of the woods is, without a doubt, FATCA going live July 1, 2014. Although the IRS and U.S. Treasury Department have signaled that the remainder of 2014 and all of 2015 are a "transition period," the government didn't slacken its pace in rolling out updated withholding forms, even as the FATCA deadline rapidly approached. The government also ramped up its intergovernmental approach to FATCA, entering into Intergovernmental Agreements ("IGAs") with countries such as China, India, Saudi Arabia, Singapore, and Hong Kong, just to name a few recent additions. This brings the IGA count to nearly 100, as of July 1, 2014, with more surely to come. For more information on FATCA, please be sure to visit our website, at www.KNOWFatca.com.

In spite of our FATCA preoccupation, this issue of Tax Talk also discusses other significant tax developments, such as the IRS's new regulations under Circular 230 governing written tax advice. In a substantial departure from the previous regulations, the IRS replaced the "covered opinion" rules with a single, simplified approach, designed to subject all written federal tax advice to one standard. As part of this guidance, the IRS made clear that a "one size fits all" Circular 230 email legend is not necessary in attorney/ accountant communications.

In other news, the IRS released private guidance addressing partnerships and financial instruments. In the first piece of guidance, the IRS addressed securities dealer activities of a partnership and whether those activities could be attributed to its partners (no, they cannot). In the second, the IRS addressed the consequences when a partnership no longer treats certain securities transactions as options and, as a result, stops deferring the associated gains, losses, income, or deductions (a change in accounting method and adjustment occurs).

Next, we provide an update on recently released proposed regulations addressing the scope of qualifying real estate assets for REITs: important rules as more and more corporations with nontraditional fixed assets are seeking to be treated as REITs. Turning from real estate to banking, this issue of Tax Talk also discusses a recent private letter ruling addressing a bank's tax reporting obligations with respect to certain fee credit programs maintained for commercial customers.

Finally, this issue of Tax Talk discusses three items on the international tax front. The first clarifies that taxpayers do not need to report virtual currencies on FBARs for 2013. The second describes the IRS's application of the section 956 anti-abuse rule to debunk a transaction designed to minimize a U.S. corporation's section 956 inclusion. The third discusses...