EDITOR'S NOTE

With the failure of health care legislation to "repeal and replace" the Affordable Care Act, eyes in Washington, D.C. are now turning to tax reform. Since Congress plans to take August off, any real tax reform effort in the public domain will only start up after Labor Day. By then, Congress will only have 65 days left in its 2017 calendar. Not much time for the comprehensive tax reform that people have been talking about. Speaking of tax reform, some progress is being made, albeit in a negative sense. The tax leadership of the House, Senate, and administration announced that plans for a border adjusted cash flow tax are dead. That will make things much simpler and was almost inevitable given the substantial resistance from the U.S. business community (at least the importer side). What, you might ask, is then left? If we focus on areas where there is some consensus we may be looking at a Republican tax reform package that (i) lowers individual and corporate rates (but not as much as the headline 15% rate from the Trump campaign), (ii) includes deemed repatriation or actual repatriation of "trapped" foreign earnings, (iii) includes mark-to-market for derivatives, (iv) includes some small business relief which might even be the special lower tax rate for business income earned through pass-throughs, and (v) includes elimination or reduction of deductions for interest on corporate debt. While these are just guesses at this point, they highlight areas where proposals either from the Congress or the president have taken relatively less flak from the various tax reform constituencies. When we will see actual legislative language, however, is anyone's guess and we still think our prediction of 2018 legislation may be where all this ends up.

Apart from this crystal ball gazing, TT 10.02 includes a discussion of two important Tax Court cases in the financial product and international tax spaces, a summary of the revocation by the IRS of a series of private letter rulings holding commodity-linked notes were securities under the tests for regulated investment companies, and more.

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Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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