December 26, 2018
ADS for Electing Real Property Trade or Business (168(g)(8)
Rev. Proc. 2019-08 (December 21, 2018) clarifies and confirms that the alternative depreciation system (ADS) applies to existing property as it does to newly-acquired property upon election made to be an electing real property trade or business. The result is the application of ADS to property such as residential rental property. Remember that ADS does not otherwise apply to residential rental property financed with proceeds of bonds issued under I.R.C. 142(a)(7). ADS requires depreciation over 40 years for such property placed in service before 2018 and 30 years for such property placed in service after 2017.
T.D. 8033: In T.D. 8033, issued under the 1954 Internal Revenue Code, as amended, the IRS indicated that “predominant use” (especially for purposes of sec. 168(h)(1)(D)) means use that is for more than 50 percent of the time. See Topical Tax Brief; Treas. Reg. § 1.168(j)–1T. The temporary regulations define the matter as follows:
‘‘Predominantly used’’ means that for more than 50 percent of the time used, as determined for each taxable year, the real or personal property is used in an unrelated trade or business the income of which is subject to tax under section 511 (determined without regard to the debt-financed income rules of section 514). If only a portion of property is predominantly used in an unrelated trade or business, the remainder may nevertheless be tax-exempt use property.
October 29, 2018
See Chief Counsel Advice 201843009 which concludes that “section 149(d), as amended by § 13532 of the 2017 Act, does not preclude the issuance of tax-exempt bonds to advance refund non-tax-advantaged, taxable bonds under the facts described below. There will not be two sets of tax-advantaged bonds outstanding for the same project or activity.”
September 29, 2018
September 28, 2018: Note that Notice 2018-80 announces the Treasury Department’s intent to not require current inclusion of market discount under I.R.C. 451(b). Market discount under I.R.C. 1276 is usually deferred until the bond is sold. Questions had arisen regarding the impact on this rule by the new provisions of 451 introduced as part of the TCJA.
February 12, 2018
PLR 201806007 (Nov. 9, 2017): A certain registration system of loans was deemed to be a book-entry system that satisfies the registration requirement of section 149(a) and is in registered form under section 5f.103-1(c)(1)(ii).
October 14, 2017
Gaylor v. Mnuchin, DC Wisc. (Oct. 12, 2017): “A federal district court has once again decided that the exemption for housing allowances provided to ministers under Code Sec. 107(2) violates the Establishment Clause. The court determined that the purpose and effect of the statute was to provide financial assistance to ministers without any consideration for similarly situated secular employees. Therefore, the statute has no secular purpose and could not be justified on secular grounds.” (CCH)
June 10, 2017
Read the following for a good description of the Pease limitation on deductions established under I.R.C. 68: https://www.scottkays.com/article/2015/04/09/pease-limitation-explained