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July 17, 2022

U.S. Tax This Week for July 15

Ernst & Young's U.S. Tax This Week newsletter for the week ending July 15 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

Proposed regulations would limit IRC Section 1256 mark-to-market accounting for foreign currency contracts to foreign currency forward contracts

On July 5, the U.S. Treasury Department and the IRS issued proposed regulations under IRC Section 1256 (REG-130675-17), (the "Proposed Regulations"). The Proposed Regulations would expressly overrule the Sixth Circuit's decision in Wright v. Commissioner, 809 F.3d 877 (6th Cir. Jan. 7, 2016) to limit the term "foreign currency contract" to only certain foreign currency forward contracts, and not foreign currency options. The Proposed Regulations would be generally effective for contracts entered into on or after the date that is 30 days after their publication as final regulations in the Federal Register. EY Tax Alert 2022-1060 has details.

OECD releases Progress Report on Amount A of Pillar One of BEPS 2.0 project and invites public comment

On 11 July 2022, the Organisation for Economic Co-operation and Development (OECD) Secretariat released a Progress Report on Amount A of Pillar One (the Progress Report) in connection with the ongoing OECD/G20 project on Addressing the Tax Challenges Arising from the Digitalisation of the Economy (the so-called BEPS 2.0 project). The Progress Report is a consultation document released by the OECD Secretariat that covers many of the building blocks with respect to the new taxing right under Amount A and is presented in the form of domestic model rules. As noted in the Progress Report, it does not yet include the rules on the administration of the new taxing right, including the tax certainty-related provisions. EY Tax Alert 2022-1042 has details.

EY Guides and Publications

Our US employment tax rates and limits publication is updated through June 15, 2022
This updated guide reflects changes in the 2022 state income tax withholding rates/tables and state unemployment insurance wage bases and tax rates.

Upcoming Webcasts

2022 Alternative and registered funds mid-year update (July 20)
During this EY Webcast, Ernst & Young professionals will discuss the following topics: (i) legislative tax update; (ii) SEC regulatory update; and (iii) accounting and financial reporting update.

Taxing crypto and other digital assets: Using practical scenarios to explore key tax concepts for individuals and businesses (July 21)
During this EY Webcast, Ernst & Young professionals will discuss recent digital assets tax trends and the outlook for changes relevant to individuals and financial services companies.

Financing the energy transition — US tax equity arrangements (July 28)
Tax equity arrangements are commonplace in wind and solar projects, and are expected to play a meaningful role in carbon capture and sequestration projects (and other future energy transition projects). During this EY Webcast, Ernst & Young professionals will discuss both tax and nontax aspects (including financing) of tax equity arrangements.

Private equity and private capital — navigating transformative global and US legislative change (August 18)
During this EY Webcast, Ernst & Young professionals will discuss recent private equity and private capital industry trends and the outlook for US and international legislative and regulatory changes relevant to PE and alternative funds, transactions and portfolio companies.

Recent Tax Alerts

Internal Revenue Service

— Jul 14: Proposed regulations address deductibility of certain estate expenses (Tax Alert 2022-1061)

— Jul 14: Proposed regulations would limit IRC Section 1256 mark-to-market accounting for foreign currency contracts to foreign currency forward contracts (Tax Alert 2022-1060)

— Jul 13: IRS TE/GE 'Issue Snapshot' identifies issue indicators and audit tips related to self-dealing exceptions (Tax Alert 2022-1053)

— Jul 12: IRS rules certain independent retirement living facilities are not health care facilities for purposes of REIT rules (Tax Alert 2022-1045)

— Jul 11: New proposed regulations define 'foreign currency contract' for purposes of IRC Section 1256 mark-to-market rules (Tax Alert 2022-1040)


— Jul 14: Costa Rica's Government publishes regulations to implement the Digital Nomads Law (Tax Alert 2022-1063)

— Jul 14: Tanzania’s President assents to Finance Act 2022 (Tax Alert 2022-1058)

— Jul 14: Saudi Arabia issues public consultation document to modify Transfer Pricing Bylaws (Tax Alert 2022-1056)

— Jul 13: Italy’s plastic tax will enter into force on 1 January 2023 (Tax Alert 2022-1052)

— Jul 13: Canada's new Underused Housing Tax Act receives Royal Assent (Tax Alert 2022-1049)

— Jul 12: OECD releases Progress Report on Amount A of Pillar One of BEPS 2.0 project and invites public comment (Tax Alert 2022-1042)

— Jul 12: Italian Tax Authority issues Ministerial Circular on Mandatory Disclosure Rules (Tax Alert 2022-1041)

— Jul 11: China reduces COVID-19 isolation period for all inbound travelers, PU letters no longer required for business visitors (Tax Alert 2022-1038)

— Jul 11: Sri Lanka introduces new 10-year Golden Paradise Residence Visa for investors (Tax Alert 2022-1037)

— Jul 11: South Africa | Overview of procedure to cease tax residency (Tax Alert 2022-1036)

— Jul 11: Poland proposes significant changes to Corporate Income Tax law (Tax Alert 2022-1033)

— Jul 11: Denmark publishes draft bill introducing tax liability for activities carried out in Denmark's Exclusive Economic Zone (Tax Alert 2022-1032)

— Jul 01: Brazil ratifies income tax treaty with Singapore, making treaty fully effective (Tax Alert 2022-1031)

— Jul 01: Cyprus introduces transfer pricing rules and documentation requirements (Tax Alert 2022-1028)

— Jul 11: The Netherlands issues new transfer pricing decree (Tax Alert 2022-1027)


— Jul 13: Ways & Means holds housing hearing (Tax Alert 2022-1057)

— Jul 13: What to expect in Washington (July 13) (Tax Alert 2022-1047)

— Jul 13: CMS issues proposed CY2023 Medicare physician fee schedule (Tax Alert 2022-1050)

— Jul 13: Energy and Commerce Subcommittee hearing on oversight of Medicare advantage plans (Tax Alert 2022-1048)


— Jul 14: "Final updates" to New York's draft business corporate franchise tax regulations will affect all industries (Tax Alert 2022-1062)

— Jul 14: City of Scranton, Pennsylvania's payroll preparation tax return for second quarter is due August 31, 2022 (Tax Alert 2022-1059)

— Jul 13: New York State appeals court holds infrequently used vacation home is not permanent place of abode for purposes of determining New York residency (Tax Alert 2022-1054)

— Jul 13: Ohio revisits Internal Revenue Code conformity, moves the date back (Tax Alert 2022-1051)

— Jul 12: Ohio Supreme Court to review Ohio city income tax imposition on remote workers (Tax Alert 2022-1044)

Recent Newsletters

ITS/Washington Dispatch
   Highlights of this edition include:


  • Democrats fail to reach consensus on pared-down budget reconciliation package
  • Treasury Secretary testifies in support of anti-inflationary measures, BEPS 2.0


  • US Supreme Court accepts FBAR filing case

IRS news

  • IRS to defer reporting for certain derivative payments in forthcoming BEAT regulations

OECD Developments

  • OECD officials offer update on BEPS 2.0 Pillars One and Two
  • OECD releases public consultation documents on tax certainty under Amount A for Pillar One

IRS Weekly Wrap-Up

Proposed Regulations

 REG-130675-17Definition of Foreign Currency Contract Under Section 1256

Revenue Procedures

 2022-3226 CFR 601.201: Rulings and determination letters

Revenue Rulings

 2022-13Applicability of section 432(b)(7) following a merger involving a multiemployer defined benefit plan that has received special financial assistance

Internal Revenue Bulletin

 2022-28Internal Revenue Bulletin of July 11, 2022
 2022-29Internal Revenue Bulletin of July 18, 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.