The American Institute of CPAs (AICPA) has provided feedback on two proposed regulations by the Treasury and Internal Revenue Service (IRS) regarding corporate reorganisations and separations.
The regulations, REG-112261-24 and REG-116085-23, focus on non-recognition of gain or loss in corporate separations and multi-year reporting requirements, respectively.
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Under the proposed regulations, taxpayers must document and report a detailed plan of distribution or reorganisation to the IRS.
This plan must be adopted before any steps are undertaken and executed promptly.
AICPA has made several recommendations to address these requirements.
It suggests relaxing the plan requirement to accommodate administrative and commercial practicalities in executing non-recognition transactions.
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By GlobalDataAdditionally, the association proposes extending the timing for plan documentation from the first step of the plan to the date transactions must be reported on relevant federal tax filings.
Furthermore, AICPA recommends revising the defective plan resolution language.
It suggests allowing taxpayers to report qualification when non-recognition requirements appear to be met, while reserving the Commissioner’s discretion to recharacterise transactions as needed.
AICPA senior manager for tax policy and advocacy Ning Yim said: “The AICPA recommends relaxing the proposed regulations’ reorganisation or distribution plan requirement to make it more administrable and practical for taxpayers and practitioners.
“Extending the time needed to document a plan of reorganisation or distribution will be of great benefit to both taxpayers and tax practitioners.”
In other developments, AICPA released a survey indicating that 37% of Americans have encountered fraudulent activities following natural disasters.
The survey highlights various types of fraud, such as identity theft (14%), government assistance fraud (11%), and loan scams (11%).
The findings reveal that residents in the north-east and south are more susceptible to fraud, with both at 40%, compared to the Midwest at 31%.
