Tax Law and International Tax Law

The IRS has intensified scrutiny of partnership basis-shifting transactions that manipulate inside and outside basis rules to generate tax savings. While recent regulations were withdrawn under the Trump Administration, the agency maintains its position through Rev. Rul. 2024-14, which identifies three transaction types that fail the economic substance doctrine.

The U.S. Treasury and IRS have issued proposed regulations addressing a new category of income excluded from deduction eligible income under section 250(b)(3)(A)(i)(VII), which was introduced by the One Big Beautiful Bill Act. These regulations clarify how income from sales of intangible property and certain depreciable assets will be treated under the foreign-derived deduction eligible income regime, with significant implications for software transactions and related party transfers.

The US Department of Treasury defends its authority to regulate stock-based compensation in cost-sharing arrangements under IRC § 482, arguing the regulations fall within statutory bounds and are necessary to ensure arm's-length results between related parties. The government's response to McKesson Corporation's summary judgment motion addresses challenges based on the Loper Bright decision and notably abandons its six-year statute of limitations defense.

The Court of Appeals for the Second Circuit affirmed the Tax Court holding that a partner must lack managerial control over a partnership before it can qualify for the “limited partner exception” from self-employment taxes.

The U.S. Department of Treasury has issued guidance on employer-sponsored Trump Account contribution programs, creating new tax-advantaged opportunities for employers to support employee savings for their children's future. Employers must navigate complex requirements analogous to dependent care assistance programs, including nondiscrimination rules, written plan documents, and compliance obligations under both the Internal Revenue Code and potentially ERISA. What are the key design considerations, tax impl

The Second Circuit has affirmed the Tax Court’s rulings against Soroban Capital Partners LP, holding that the firm’s three principals were not “limited partners” for purposes of the self-employment tax exclusion found in I.R.C. § 1402(a)(13), despite formally holding limited partner status under Delaware law. Under the Internal Revenue Code, a partner’s distributive share of partnership income is generally treated as self-employment income subject to the 15.3 percent self-employment tax on income up to $184,500 in 2026 (2.9 percent rate above that threshold), which funds Social Security and Medicare. Section 1402(a)(13), however, excludes from that tax the distributive share of a “limited partner, as such,” other than guaranteed payments for services rendered.

Liability management exercises (LMEs) offer companies facing financial pressure an alternative to formal bankruptcy, but their tax consequences can significantly impact long-term value creation. Understanding how different LME structures affect cancellation of indebtedness income, tax attributes, and future deductions is essential for stakeholders evaluating out-of-court debt restructuring options.

Navigating the complex landscape of US federal income tax rules is crucial for investors and sponsors in private equity, venture capital, and hedge funds. Understanding how different investor categories—from US taxable entities to foreign pension funds—face distinct tax sensitivities can significantly impact investment returns and structural decisions when forming or investing in funds.

U.S. companies making cross-border dispute payments face unexpected tax liability when withholding requirements are overlooked. Understanding how the origin of the claim doctrine characterizes settlements and damages as FDAP income can prevent costly surprises and ensure proper tax compliance in international dispute resolution.

The U.S. Department of Treasury has issued guidance on employer-sponsored Trump Account contribution programs, creating new tax-advantaged opportunities for employers to support employee savings for their children's future. Employers must navigate complex requirements analogous to dependent care assistance programs, including nondiscrimination rules, written plan documents, and compliance obligations under both the Internal Revenue Code and potentially ERISA. What are the key design considerations, tax impl

The California Department of Tax and Fee Administration (CDTFA) has released draft regulatory language it is considering proposing, offering its first comprehensive view of how it may administer Senate Bill 122, California's expansion of sales and use tax to software as a service (SaaS) and certain digital products beginning January 1, 2027. CDTFA has not yet formally proposed these regulations through the emergency rulemaking process.

Companies that invest in innovation can leverage the federal research and development tax credit under Section 41 of the Internal Revenue Code to offset costs. However, the qualification rules and substantiation requirements are complex, and errors can trigger IRS disputes that transform this valuable benefit into a costly examination.