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January 30, 2022

U.S. Tax This Week for January 28

Ernst & Young's U.S. Tax This Week newsletter for the week ending January 28 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

Treasury releases final regulations on the treatment of domestic partnerships under IRC Section 958, as well as proposed PFIC regulations

Treasury finalized regulations (TD 9960) requiring an aggregate approach to determine the Subpart F inclusion for a controlled foreign corporation (CFC) owned by a domestic partnership. Under this approach, a partner of a domestic partnership would have a Subpart F inclusion from the indirectly-owned CFC if the partner itself were a US shareholder of the underlying CFC. This aggregate approach is consistent with the treatment of a domestic partnership for GILTI inclusion purposes. The aggregate approach does not, however, apply for IRC Section 1248 purposes or when determining whether (i) a US person is a US shareholder, or (ii) a foreign corporation is a CFC. EY Tax Alert 2022-9001 has details.

IRS changes to instructions for 2021 partnership Schedules K-2 and K-3 are relevant to many partnerships, including private equity and private capital funds

On January 18, 2022, the IRS outlined changes to previously issued IRS instructions for Schedules K-2 and K-3 for the 2021 tax year IRS Form 1065, U.S. Return of Partnership Income. Schedules K-2 and K-3 are new reporting forms that pass-through entities generally must complete, beginning in the 2021 tax year. EY Tax Alert 2022-0152 has details.

EY Guides and Publications

Asean Mobility Spotlight (January 2022)
In this edition of the Asean Mobility Spotlight, we highlight the measures introduced by governments in the Asean region to support businesses and employees through the pandemic as well as provide guidance to the required year-end reporting obligations applicable for selected Asean jurisdictions.

Upcoming Webcasts

Tax in the time of COVID-19: Update on legislative, economic, regulatory and IRS developments (February 4)
During this EY Webcast, Ernst & Young panelists will provide updates on: (i) the US economy and tax policy; (ii) breaking developments; and (iii) what’s happening at the IRS.

How to respond to the continued evolution of hybrid work (February 8)
During this EY Webcast, Ernst & Young professionals will discuss hybrid working and how organizations are moving forward in the complicated world of travel disruption, vaccine requirements, changing government policies and fluctuating return-to-office plans.

International tax talk quarterly series…With the EY Global Tax Desk Network (February 8)
The European Commission recently published a legislative proposal for a directive to tackle the misuse of shell entities in the European Union (UNSHELL/ATAD 3). This EY Webcast will address how implementation of these new requirements could affect businesses. At a high level, the webcast will also consider the impact these provisions are likely to have in other regions with respect to similar anti-abuse rules and reporting requirements, as well as these countries’ responses to increased tax transparency in recent years.

What India’s 2022-23 Budget could mean for its economy (February 9)
Join us for this EY Webcast, during which our senior EY tax and policy professionals will help decode the fine print of the 2022-23 India Budget, covering the macroeconomic and policy announcements, direct tax proposals and indirect tax proposals.

Recent Tax Alerts

Internal Revenue Service

— Jan 27: Helpful reminders and tips to know before filing 2021 Forms 1099 (Tax Alert 2022-0157)

— Jan 25: IRS announces pilot fast-track program that resolves corporate letter ruling requests in 12 weeks (Tax Alert 2022-0144)


— Jan 27: Recent Access to Information and Privacy request regarding Express Entry into Canada discussed (Tax Alert 2022-0156)

— Jan 27: Cyprus Tax Authority issues Frequently Asked Questions on loans financed by debt (Tax Alert 2022-0154)

— Jan 27: Kenya publishes Common Reporting Standards regulations (Tax Alert 2022-0153)

— Jan 27: Algeria’s 2022 Finance Act introduces new tax measures (Tax Alert 2022-0151)

— Jan 27: OECD releases eighth batch of Stage 2 peer review reports on dispute resolution (Tax Alert 2022-0150)

— Jan 26: New Alberta Immigration Nominee Program introduced (Tax Alert 2022-0149)

— Jan 26: Peru's President modifies rules for enacting tax exemptions and tax benefits (Tax Alert 2022-0148)

— Jan 26: Romania permits Digital nomads to extend their stay beyond 90 days (Tax Alert 2022-0146)

— Jan 26: Brazil lifts its prohibition on air travel from Botswana, Eswatini, Lesotho, Namibia, South Africa and Zimbabwe (Tax Alert 2022-0145)

— Jan 25: Hong Kong introduces new e-Visa (Tax Alert 2022-0140)

— Jan 25: Australia relaxes border and visa restrictions to address skill shortage (Tax Alert 2022-0139)

— Jan 24: Quebec introduces new flexibility to the Temporary Foreign Worker Program (Tax Alert 2022-0133)

— Jan 24: Canada introduces new travel restrictions for unvaccinated foreign nationals (Tax Alert 2022-0132)

— Jan 21: OECD publishes 2022 Transfer Pricing Guidelines (Tax Alert 2022-0126)

— Jan 21: The Latest on BEPS and Beyond | A 2021 review (Tax Alert 2022-0121)


— Jan 25: Ways and Means Subcommittee on Oversight focuses on how college coaches' pay furthers exempt purposes (Tax Alert 2022-0143)


— Jan 25: South Carolina extends COVID-19 nexus and income tax withholding relief for remote workers (Tax Alert 2022-0142)

— Jan 24: Wisconsin ends nexus and income tax withholding relief for COVID-19 expires effective January 1, 2022 (Tax Alert 2022-0134)

— Jan 21: New York updates nonresident audit guidelines to change 11-month rule to 10-month rule for determining residency (Tax Alert 2022-0129)

— Jan 21: Governor Murphy signs New Jersey Business Alternative Income Tax revisions into law (Tax Alert 2022-0128)

Recent Newsletters

State and Local Tax Weekly

   Highlights of this edition include:

New York updates nonresident audit guidelines to change 11-month rule to 10-month rule for determining residency In December 2021, the New York State Department of Taxation and Finance (Department) revised its Nonresident Audit Guidelines (the 2021 Guidelines), which were last updated in 2014 (the 2014 Guidelines). 

—  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

Final Regulations

 TD 9960Guidance Under Section 958 on Determining Stock Ownership

Proposed Regulations

 REG–118250–20Guidance on Passive Foreign Investment Companies and Controlled Foreign Corporations Held by Domestic Partnerships and S Corporations and Related Person Insurance Income

Revenue Procedures

 2022-12Individuals required to make returns of income

Internal Revenue Bulletin

 2022-4Internal Revenue Bulletin of January 24, 2022

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.