In 2024, a year marked by numerous natural disasters, the IRS has stepped up to provide taxpayers with crucial relief measures. More than 60 disaster relief notices have been issued, offering postponement of tax return filing and tax payment due dates for individuals and businesses across various U.S. counties. This relief is vital as individuals and businesses begin the challenging recovery process, which often involves navigating insurance claims and understanding loss deductions for the first time.

The federal tax law provides rules for those claiming losses as a result of damages to business, investment and personal use property. Federal tax rules also benefit those who might realize a casualty gain when insurance proceeds exceed the cost or basis of damaged property.

In this episode, Tax Services Partner Brooks Nelson, Tax Director Sarah McGregor, and Tax Services Partner Mark Giallonardo join together to discuss IRS disaster filing relief, tax gains and losses resulting from property damage in federally declared disasters, and the impact of the TCJA on these claims.

Listen to learn more about:

• 03:47 – How the TCJA Affects Casualty Loss Deductions
• 05:32 – Methods for Assessing Fair Market Value
• 07:20 – Individual Loss Claims: TCJA Limitations Explained
• 08:40 – Business Loss Claims: Navigating TCJA Restrictions
• 09:55 – Understanding Timing Rules for Casualty Losses
• 12:45 – Strategies to Prevent Tax Gains When Claiming Losses
• 14:12 – Navigating the IRS Disaster Relief Funding Process

Related Insights

• Article: Navigating Hurricanes and Tax Relief: Guidance from the IRS and State Tax Authorities
• Article: The Trump-Era Tax Cuts Expiring in 2025

The employee retention credit (ERC) remains a hot topic as the Internal Revenue Service (IRS) has opened a new window for its voluntary disclosure program, allowing employers to withdraw their claims. While the IRS is processing and paying out refunds for the ERC, it has also introduced new conditions that seem to disqualify certain wages from eligibility. In response, some eligible employers are beginning to take legal action to compel the IRS to address their pending refund claims.

In this episode, Tax Services Partner Brooks Nelson and Tax Director Sarah McGregor are joined by Partner and Tax Credits & Incentives Advisory Practice Leader Martin Karamon. Together, they discuss the complexities of the ERC and the IRS's actions to address both legitimate and dubious claims.

Listen to learn more about:

• 02:23 – ERC overview
• 04:34 – IRS moratorium updates
• 06:32 – IRS timeline for resuming new claims
• 09:06 – 8/15 ERC voluntary disclosure program
• 10:58 – Sources for employer VDP info
• 12:48 – IRS 12 signs of incorrect ERC claims
• 14:56 – ERC claim payment status amid IRS audits
• 15:58 – Trends in employer lawsuits for refunds

Related Insights

• Article: Avoiding the Risk of Incorrect Employee Retention Credit Claims
• Webinar: The Employee Retention Credit: 2024 Updates
• Article: 2024 Most Frequently Asked Questions about the Employee Retention Credit (ERC)
• Article: Understanding IRS’ Voluntary Disclosures Program for Employee Retention Credit (ERC) Claims

The Section 179D Energy Efficient Commercial Building Deduction (Section 179D) and cost segregation studies can help commercial building owners save significantly on taxes. Section 179D provides a tax deduction for new construction and renovations to the HVAC, interior lighting and building envelope, while cost segregation studies help identify assets with shorter depreciable lives. When paired together, they create the best opportunity for building owners to maximize tax savings and increase cash flow by identifying and accelerating depreciation on energy-efficient assets.

The expansion of the Section 179D deduction through the Inflation Reduction Act (IRA) offers even more incentives for building owners, architects, engineers and design-build contractors who create technical specifications before and during the construction process. Utilizing these options can significantly reduce a building owner's tax liability and improve cash flow. Cost segregation studies analyze the parts of a commercial building to identify assets with shorter depreciable lives allowing owners to accelerate their depreciation deductions and reduce taxable income.

In this episode, Brooks Nelson, Tax Partner and Sarah McGregor, Tax Director, are joined by Glenn LeMieux, Tax Credits & Incentives Advisory Director, and Andre Kohn, Tax Credits & Incentives Advisory Senior Associate. Together, they discuss federal tax credits and incentives related to clean energy, energy-efficient buildings and cost segregation opportunities.

Listen to learn more about:

• 03:28 – Cost segregation study background
• 07:02 – Applications of cost segregation
• 08:52 – Cost segregation study process
• 10:42 – Section 179D background
• 14:57 – Qualifying for Section 179D
• 17:01 – Energy-efficient improvements
• 18:58 – Prevailing wage updates
• 23:51 – Strong candidates for these incentives
• 27:20 – Combining Section 179D and cost segregation

Related Guidance

• Article | Designing for Efficiency: How the 179D Tax Deduction Benefits A&E Firms and the Environment
• Podcast | 179D Energy-Efficient Commercial Buildings Deduction for Not-for-Profits
• Webinar | Maximize Tax Savings Through Cost Segregation, Section 179D, and Section 45L Approach and Client Success Stories
• Article | Factors to Consider When Seeking Cost Segregation and Section 179D Study Service Providers

For fast-growing companies, becoming a C corporation for income tax purposes can offer significant tax savings for their shareholders. Section 1202 of the Internal Revenue Code (IRC) is a powerful tool for attracting investors with funds to fuel a company's growth.

To qualify for these tax benefits, both the company and shareholder must meet specific requirements, and non-compliance can result in missed opportunities for savings. It is crucial for businesses to have a comprehensive understanding of the qualifications and technical aspects of Section 1202 to make the most of this tax law.

In this episode, Brooks Nelson, Tax Partner and Sarah McGregor, Tax Director, are joined by Barry Weins, Tax Director and Molly Gill, Transaction Tax Senior Associate. Together they discuss how qualified business stock offers a valuable opportunity to exclude capital gains from taxation, making it a powerful tool for attracting investors and fueling the growth of small to mid-sized businesses.

Listen to learn more about:

• 02:11 – Section 1202 background
• 04:57 – Businesses that qualify for Section 1202
• 05:47 – Beneficial transaction examples
• 06:42 – Recurring questions regarding Section 1202
• 10:37 – Difficulties of collecting client information
• 13:31 – Factors investors should consider
• 18:02 – How to become eligible for Section 1202
• 20:03 – How state provisions vary

Related Guidance

• Article: LLC vs. S Corp: Which Offers Better Tax Savings?
• Webinar: Maximize Tax Savings Through Cost Segregation, Section 179D, and Section 45L Approach and Client Success Stories

Public Law 86-272 (PL 86-272) offers limited protection to out-of-state companies that solely solicit sales for tangible personal property within a state. Small and medium-sized businesses in the manufacturing, distribution and retail sectors have heavily relied upon this state protection since it was enacted in 1959 to decrease overall tax liability.

In 2021, the Multistate Tax Commission (MTC) released a controversial reinterpretation of what activities may be considered more than mere sales solicitation. The MTC guidance suggests that some internet-based activities such as post purchase chats, online tutorials and cookies used for data mining may cause a business to no longer qualify for the protection of PL 86-272.

In this episode, Brooks Nelson, Partner and Strategic Tax Leader, and Sarah McGregor, Tax Director, are joined by Louis Cole, Partner and State & Local Tax Services Leader, and Cathie Shaw, National Tax Partner. Together they discuss the current challenges surrounding PL 86-272 and the increasing pressure stemming from the evolution of modern-day business practices.

Listen to learn more about:

• 04:07 – PL 86-272 background
• 05:25 – MTC authority
• 06:45 – Businesses that have adopted MTC interpretations
• 10:07 – MTC impact on small businesses
• 12:45 – Determining nexus without the sale of tangible goods
• 14:59 – Relevance of nexus studies
• 16:59 – Record keeping and internet activity analyses
• 19:43 – Mitigating compliance burden

Related Guidance

• The Income Tax Nexus Battle and Federal Public Law 86-272

Private aircraft ownership can be a great asset for companies, providing convenience, flexibility and efficiency for business travel. However, ownership also comes with significant costs, including purchase, maintenance, fuel and insurance. In addition to these expenses, companies that own private aircraft must also comply with various tax regulations, including properly reporting any personal use of the aircraft by company owners and executives, as the Internal Revenue Service (IRS) has recently been targeting this area for audits.

To further examine compliance with tax regulations, the IRS has initiated a pilot program to audit tax returns associated with up to 48 corporate-owned jets. The results of these initial examinations will help the IRS determine where to focus further attention. Despite the potential tax implications, owning and operating a private aircraft can still be a valuable business tool if managed properly.

Brooks Nelson, Partner and Strategic Tax Leader, and Sarah McGregor, Tax Director, talk with Mike Grim, State & Local Tax Director, about how companies can navigate the intricate IRS tax regulations associated with owning a private aircraft to maintain compliance and maximize tax savings.

Listen to learn more about:

• 02:41 – Federal private aircraft regulation background
• 06:36 – Key IRS tax issues
• 09:24 – Tax reporting key areas
• 11:14 – Disallowance of expense deductions
• 14:22 – IRS pilot audits
• 17:37 – Questions to consider before purchasing a private aircraft

Recent Tax Beat Episodes

• Inbound U.S. Tax Services
• Accounting Standards Update 2023-09: New Income Tax Disclosure Rules
• IRS ERC Voluntary Disclosures Program
• New Markets Tax Credits and Innovate Fund Award
• TCJA: Estate & Trust Planning Update

When expanding operations into the U.S. market, business owners must learn about the federal, state and local tax systems they will encounter. Sales tax in the U.S. is quite different from a value-added tax (VAT) or a goods and services tax (GST) assessed by many other countries. Companies selling goods and some services must comply with a sales tax system that can vary across thousands of taxing jurisdictions. The U.S. federal tax system can also be challenging for companies new to this country. Companies and their tax advisors are currently busy working towards the March and April deadlines for filing tax returns, applications for additional extensions of time to file returns, and reporting income tax withholding.

Brooks Nelson, Partner and Strategic Tax Leader, and Sarah McGregor, Tax Director, talk with Lauren Stinson, Sales and Use Tax Leader, and Brian Dill, International Tax Leader, about the tax reporting complexities that international companies encounter when carrying on business in the U.S.

Listen to learn more about:

• 03:54 – GST tax vs. U.S. sales tax
• 05:24 – Compliance differences
• 06:43 – Nexus
• 12:02 – Preparing for March 15 deadline
• 14:54 – Important foreign subsidiary owner discussions
• 17:14 – Outsource solutions

Related Guidance

• Article: Tax Insights for Indian Companies in the U.S. Market
• Article: Beneficial Owner Information Reporting Final Rule for FinCEN Entity Identifiers
• Article: ASU 2023-09: FASB’s New Income Tax Disclosures for Private Entities
• Article: ASU 2023-09: New FASB Rule Enhances Income Tax Disclosures for Public Companies
• Podcast: Accounting Standards Update 2023-09: New Income Tax Disclosure Rules

On December 14, 2023, the Financial Accounting Standards Board (FASB) expanded income tax disclosure requirements for public and private companies. The expanded disclosure requirements are detailed in Accounting Standards Update No. 2023-09 (ASU 2023-09) and increase transparency of a filer’s global taxes. This will require filers to provide more details and be more descriptive in their financial statement income tax disclosures, which should enable business leaders and investors to make more informed investment decisions.

Brooks Nelson, Partner and Strategic Tax Leader, and Sarah McGregor, Tax Director, talk with William Billips, Partner and Tax Provisions Leader, and Brian Dill, Partner and International Tax Leader, about ASU 2023-09 and how the new regulations will significantly impact multinational companies, particularly public and private entities.

Listen to learn more about:

• 03:49 – Background on ASU 2023-09
• 05:19 – Common requirements
• 07:47 – Rate reconciliation overview
• 09:48 – New challenges with tax disclosures in foreign jurisdictions
• 13:14 – Steps to prepare for tax reporting next year
• 16:38 – Affiliates in foreign jurisdictions

Related Guidance

• ASU 2023-09: New FASB Rule Enhances Income Tax Disclosures for Public Companies
• ASU 2023-09: FASB’s New Income Tax Disclosures for Private Entities