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July 25, 2021

U.S. Tax This Week for July 23

Ernst & Young's U.S. Tax This Week newsletter for the week ending July 23 is now available. Prepared by Ernst & Young's National Tax Department in Washington, D.C., this weekly update summarizes important news, cases, and other developments in U.S. taxation.

Top of the Week

IRS memo addresses cost sharing agreements and inclusion of stock-based compensation costs

In a generic legal advice memorandum (GLAM) the IRS Office of Chief Counsel (AM 2021-004) addressed its views on the treatment of stock-based compensation (SBC) costs in cost sharing agreements that include a "reverse claw-back" provision, but do not share SBC costs (non-SBC CS agreements). The IRS asserted that it can make certain allocations to make the cost sharing transactions consistent with an arm's length result. The IRS discussed how to treat those allocations for SBC costs and the timing of the adjustments. EY Tax Alert 2021-1389 has details.

IRS rules that investor that owns at least one component of carbon capture equipment can claim IRC Section 45Q credit

In Revenue Ruling 2021-13, the IRS ruled that (1) an acid gas removal (AGR) unit at a methanol plant constitutes carbon capture equipment; and (2) the person to whom the IRC Section 45Q credit is attributable must own at least one component of the carbon capture equipment. The IRS also ruled that, for purposes of IRC Section 45Q(a), the original placed-in-service date of a single process train of carbon capture equipment that includes new and existing equipment is the date the single process train is ready and available to capture, process and prepare carbon oxide for transport. EY Tax Alert 2021-1402 has details.

Upcoming Webcasts

Tax risk and controversy for companies operating in Asia-Pacific (July 26)
During this EY Webcast, Ernst & Young professionals will review key findings of the 2021 EY Tax risk and controversy survey and discuss why companies operating in Asia-Pacific should build their Tax Controversy Department of the Future without delay.

Brazil: Proposed tax reform could significantly impact corporations with operations in Brazil (July 27)
The second phase of Brazil’s comprehensive tax reform proposes significant changes to the corporate income tax system. These changes, which were part of a bill introduced in late June, include reducing the corporate income tax rate, establishing a withholding tax on dividends and strengthening the rules on the disguised distribution of profits. If approved this year, the proposed changes will be effective as of January 2022, leaving taxpayers limited time to prepare. Register for this Thought Center Webcast, here.

BorderCrossings . . . With EY transfer pricing and tax professionals (July 29)
During this Thought Center Webcast, Ernst & Young professionals will help you stay informed and able to adopt a more proactive stance in developing and defending your transfer pricing policies and practices.

Tax in the time of COVID-19: Update on legislative, economic, regulatory and IRS developments (July 30)
During this Thought Center Webcast, Ernst & Young professionals will discuss how businesses can navigate the tax policy environment and continue to effectively operate their tax function in this time of crisis and change.

The indirect tax technology journey: Now. Next. Beyond. (August 5)
During this Thought Center Webcast, Ernst & Young professionals will share insights into how market-leading organizations are using technology to adapt to new legislation and market trends, and to effectively transform tax operations.

Recent Tax Alerts

Internal Revenue Service

— Jul 22: IRS rules that investor that owns at least one component of carbon capture equipment can claim IRC Section 45Q credit (Tax Alert 2021-1402)

— Jul 21: IRS issues proposed regulations intended to increase electronic filing (Tax Alert 2021-1400)

— Jul 20: IRS memo addresses cost sharing agreements and inclusion of stock-based compensation costs (Tax Alert 2021-1389)

— Jul 16: IRS adds two benefit-overpayment correction methods to EPCRS (Tax Alert 2021-1374)


— Jul 23: UK publishes draft legislation for Finance Bill 2022 (Tax Alert 2021-1404)

— Jul 22: Gibraltar issues Budget 2021 (Tax Alert 2021-1401)

— Jul 21: Ireland launches public consultation on OECD International Tax Proposals (Tax Alert 2021-1397)

— Jul 20: Ecuador issues oil and gas policy and reduces customs tariffs (Tax Alert 2021-1392)

— Jul 21: The Latest on BEPS and Beyond for July 2021 (Tax Alert 2021-1391)

— Jul 20: Georgia imposes VAT on foreign suppliers of digital services (Tax Alert 2021-1387)

— Jul 16: Spain approves Anti-Tax Fraud Law (Tax Alert 2021-1373)

— Jul 16: Spain | EU ETFs no longer qualify for traspasos regime (Tax Alert 2021-1372)

— Jul 16: Ireland’s Department of Finance opens consultation on EU ATAD Interest Limitation Rule and Anti-Reverse Hybrid Rule effective 1 January 2022 (Tax Alert 2021-1366)

— Jul 15: Peru implements new, stricter requirements for residence visa applications (Tax Alert 2021-1364)

— Jul 16: Germany enacts EU ATAD Implementation Law including anti-hybrid rules (Tax Alert 2021-1363)

— Jul 16: European Commission proposes legislative package including environmental tax measures to support EU climate ambitions (Tax Alert 2021-1362)

— Jul 13: Brazil announces new entry rules for Venezuelan nationals, maritime crew and individuals who recovered from COVID-19 (Tax Alert 2021-1349)

— Jul 12: South Korea launches pilot project 'Electronic Travel Authorization' for visa-free entry for foreign nationals; official launch in September 2021 (Tax Alert 2021-1328)

— Jul 12: India releases significant international travel announcements (Tax Alert 2021-1327)


— Jul 21: CMS issues CY2022 medicare hospital outpatient and ASC payment rule (Tax Alert 2021-1395)

— Jul 21: What to expect in Washington (July 21) (Tax Alert 2021-1394)

— Jul 19: Tax M&A Update for June 2021 (Tax Alert 2021-1384)


— Jul 22: Governor signs bill establishing elective pass-through entity tax in California (Tax Alert 2021-1407)

— Jul 22: Kansas law increases standard deduction for personal income tax; revised 2021 income tax withholding tables published (Tax Alert 2021-1403)

— Jul 21: Idaho law adjusts 2021 personal income tax rates and brackets, revised 2021 income tax withholding tables issued (Tax Alert 2021-1396)

— Jul 20: Minnesota enacts elective pass-through entity tax and IRC conformity provisions (Tax Alert 2021-1393)

— Jul 20: Florida law reduces the time that employers have to respond to UI benefit claim notices, mass claim filing option now available to employers (Tax Alert 2021-1390)

— Jul 15: Colorado continues to relieve employer accounts of regular COVID-19 UI benefits, 2022 SUI tax rates and wage base expected to increase (Tax Alert 2021-1365)

Recent Newsletters

State and Local Tax Weekly
   Highlights of this edition include:

Ohio enacts tax changes, including individual rate reductions, excluding certain capital gains from income On June 30, 2021, Governor Mike DeWine signed 2021 Ohio Substitute House Bill 110 (OH HB 110), which is Ohio's biennial budget legislation. OH HB 110 includes numerous tax law changes affecting income taxes, sales/use taxes, the Commercial Activity Tax (OH CAT) and certain Ohio incentives programs.

—  Income/Franchise, Sales & Use, Business Incentives, Property Tax, Controversy, Payroll & Employment Tax, Miscellaneous Tax, Unclaimed Property, Value Added Tax, Unclaimed Property

IRS Weekly Wrap-Up

Proposed Regulations

 REG-102951-16Electronic-Filing Requirements for Specified Returns and Other Documents

Internal Revenue Bulletin

 2021-30Internal Revenue Bulletin of July 26, 2021

Because the matters covered herein are complicated, U.S. Tax This Week should not be regarded as offering a complete explanation and should not be used for making decisions. Any decision concerning matters covered herein should be reviewed with a qualified tax advisor.