IRS Proposals: Add 1, Cut 2?By
While a congressional tax package is in the process of being structured, current Internal Revenue Service (IRS) rules are expected to be caught up in President Trump’s executive order requiring federal agencies to eliminate two existing regulations for each new one that is finalized. On the cusp of finalization under the Obama administration, a change was proposed to the partnership auditing rules first established by Congress in 1982. The Treasury Department, on behalf of the IRS, proposed the new rules on January 17, 2017. Companies are eager to have these finalized.
In the process, the IRS would have to cancel two other rules. One that the American Institute of CPAs (AICPA) is campaigning to have repealed is the proposed regulations under IRC §2704 that have to do with the valuation of interests in corporations and partnerships for estate, gift, and generation-skipping transfer tax purposes. If finalized, this change would hurt family-owned businesses by creating questions about the value of the gift when a business is passed down to the next generation. In a letter to Treasury and the IRS on January 17, 2017, AICPA Tax Executive Committee Chair Annette Nellen wrote, the regulations “are overly broad and expand the breadth of section 2704 in a manner not contemplated by Congress.”