On March 11, 2024, the Biden Administration released the Fiscal Year 2025 Budget, and the “General Explanations of the Administration’s Fiscal Year 2025 Revenue Proposals,” which is commonly referred to as the “Green Book.” The Green Book summarizes the Administration’s tax proposals contained in the Budget. The Green Book is not proposed legislation, and each of the proposals will have to be introduced and passed by Congress. Most of this year’s proposals were previously proposed. This blog post summarizes some of the Green Book’s key proposals. Summary of the Green Book’s Proposals: I ..read more

As part of the UK’s Spring Budget 2024, the Chancellor of the Exchequer, Jeremy Hunt, has announced the abolition of the remittance basis for income tax and capital gains tax for non-UK domiciled, UK resident individuals (the “Non-Dom Regime”) with effect from 6 April 2025. It is proposed that it is replaced with a new elective foreign income and gains regime that will apply for the first four tax years of UK tax residence for individuals who have not been UK tax resident for the previous ten years.   There is also a proposal to reform inheritance tax to remove the connection with a ..read more

I. Executive Summary On February 15, 2024, the IRS and Treasury issued a supplemental notice to a prior notice from December 2022, to correct a petition requesting that the Superfund Chemical Tax apply to polyphenylene sulfide. While the supplemental notice is narrow in scope, the IRS and Treasury have requested public comments by April 15, 2024 on the corrected petition more generally. The Superfund Chemical Tax, which went into effect on July 1, 2022, reinstated an excise tax imposed on manufacturers, producers, and importers of certain chemicals and chemical substances. (Please see our earl ..read more

On January 17, 2024, Senate Finance Committee Chairman Ron Wyden (D-Ore.) and House Ways and Means Committee Chairman Jason Smith (R-Mo.) released a bill, the “Tax Relief for American Families and Workers Act of 2024” (“TRAFA” or the “bill”). All of the provisions in the bill are taxpayer favorable, except those that apply to the “employee retention tax credit”. In short, the bill, if enacted as introduced, would: • Allow taxpayers to deduct rather than amortize domestic research or experimental costs until 2026. Under current law, domestic research and experimental expenditures incurred after ..read more

On 6 December, HMRC updated the section in its International Manual discussing the UK tax characterisation of overseas entities, and of Delaware (and other US) limited liability companies (LLCs) in particular (in INTM180000 and INTM180050). This part of the International Manual sets out HMRC’s views on whether certain foreign entities are “opaque” or “transparent” for UK tax purposes and the characteristics of the relevant overseas law applicable to the entities which are relevant to making the determination. The foreign entities referred to are those that have been specifically considered by ..read more

On November 15, 2023, the U.S. Tax Court held in YA Global Investments v. Commissioner[1] that a non-U.S. private equity fund (YA Global) with a U.S. asset manager that bought equity and convertible debt of U.S. portfolio companies was engaged in the conduct of a trade or business within the United States for U.S. federal income tax purposes, all of its income was “effectively connected” to that trade or business, and the fund (which was treated as a partnership for U.S. federal income tax purposes) was liable for penalties and interest for failing to withhold with respect to its non-U.S. corp ..read more

In 2021, the Corporate Transparency Act was enacted into U.S. federal law as part of a multinational effort to rein in the use of entities to mask illegal activity, including proposed rules (effective January 1, 2024) requiring certain types of entities to file a report identifying the entity’s beneficial owners as well as the natural persons who formed the entity unless an exemption applies. The Reporting Rule exempts “large operating companies,” among other categories, from the reporting requirements. This article reviews the requirements to qualify as a large operating company and identifie ..read more

Introduction Section 1402(a)(13) of the Internal Revenue Code provides that the distributive share of “limited partners, as such” from a partnership is not subject to self-employment tax.[1]  Managers of private equity and hedge funds are routinely structured as limited partnerships to exclude management and incentive fees from self-employment taxes. On November 28, 2023, the Tax Court in Soroban Capital Partners LP v. Commissioner[2] held that the phrase “limited partner, as such” means that, in order to benefit from the self-employment exclusion, a limited partner must be passive and ca ..read more

The Upper Tribunal (UT) has upheld the decision of the First‑tier Tribunal (FTT) regarding the application of the UK’s salaried member rules (the Rules) to certain members of BlueCrest Capital Management (UK) LLP (BlueCrest), an asset manager engaged in the provision of hedge fund management services. We previously reported on the FTT decision in June 2022. A high‑level summary of the relevant aspects of the Rules, which can treat certain limited liability partnership (LLP) members as employees, and the FTT’s decision is set out below. For more information on this decision and for further back ..read more

On July 11, 2023, the Senate Finance Committee released an open letter to the Digital Asset Community asking a variety of questions in connection with possible future legislation. Public comments must be emailed to the Senate Finance Committee staff at responses@finance.senate.gov by September 8, 2023. The questions are related to the following nine general areas. Marking-to-market for traders and dealers; Trading safe harbor; Treatment of loans of digital assets; Wash sales; Constructive sales; Timing and source of income earned from staking and mining; Nonfunctional currency; FATCA and FBAR ..read more