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June 1, 2023

U.S. Tax This Week for June 2

Ernst & Young's U.S. Tax This Week newsletter for the week ending June 2 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

United States | IRS GLAM concludes that the regularly-traded-stock-exception test under IRC Section 897(c)(3) applies at partnership level

In a generic legal advice memorandum (AM 2023-003 or GLAM), the IRS Office of the Chief Counsel addressed the application of the regularly traded stock exception under IRC Section 897(c)(3) to stock of a United States real property holding corporation (USRPHC) held by a partnership. The IRS concluded that the 5% ownership test (10% for real estate investment trusts (REITs)) should apply at the partnership level (an entity approach). The GLAM clarifies the IRS's position on an issue of longstanding uncertainty. Foreign persons and the partnerships in which they invest should consider the GLAM's impact on their US taxation and reporting requirements. EY Tax Alert 2023-0947 has details.

IRS officials highlight latest transfer pricing developments

At the 12th Annual Pacific Rim Tax Conference on May 18, 2023, IRS officials highlighted three transfer pricing developments. First, the IRS is bolstering transfer pricing enforcement through increased staff and data analytics. Second, the IRS will accept unspecified methods when they lead to a reliable result. Third, the IRS supports Amount B under Pillar One of the two-pillar plan of the Organisation for Economic Cooperation and Development (OECD). The officials also confirmed that the Advance Pricing and Mutual Agreement Program (APMA) will still accept complicated cases in its Advance Pricing Agreement (APA) program. EY Tax Alert 2023-0951 has details.

Upcoming Webcasts

Domestic tax quarterly webcast series: A focus on state tax matters (June 7)
During this EY Webcast, Ernst & Young professionals will discuss important state tax policy developments, as well as international tax policy developments that could affect state and local taxes. Topics will include: (i) Potential US state and local tax implications of the OECD’s Model Rules for new global minimum taxes under Pillar Two of the BEPS 2.0 project; (ii) State income tax considerations of credits enacted under the federal Inflation Reduction Act; (iii) An update on state fiscal conditions; (iv) Highlights from the 2023 state legislative sessions; and (v) Other state tax policy considerations, including non-legislative developments.

BEPS 2.0: Pillar Two implementation and practical considerations (June 7)
During this EY Webcast, Ernst & Young professionals will examine the latest BEPS 2.0 Pillar Two implementation activity in countries around the world and highlight practical considerations with respect to the Pillar Two rules and guidance issued to date by the Inclusive Framework.

Private equity and private capital quarterly tax webcast (June 8)
During this EY Webcast, Ernst & Young professionals will discuss recent global private equity (PE) industry trends and the outlook for changes relevant to PE and alternative funds, transactions, fund professionals, and portfolio companies.

How to understand the new class of tax authority governance programs in Americas (June 14)
During this EY Webcast, Ernst & Young professionals will describe the rapidly growing focus of business and tax authorities on tax governance.

Tax in a time of transition: Legislative, economic, regulatory and IRS developments (June 16)
Please join us for a fast-paced overview of recent tax and economic developments designed to help you stay on top of changes in today’s shifting economic, legislative and regulatory environment. In this regularly occurring EY Webcast series, panelists will provide updates on: (i) the US economy and tax policy; (ii) what’s happening at the IRS; and (iii) breaking developments.

Accounting for income taxes: A quarterly perspective (June 20)
During this EY Webcast, Ernst & Young professionals will discuss ongoing issues and regulatory trends in the tax accounting arena. Topics will include recent tax legislation with tax accounting implications and a review of current income tax accounting concepts.

Finance and treasury: How to navigate the changing global tax landscape (June 28)
During this EY Webcast, Ernst & Young professionals will discuss key tax trends and topics that will affect global finance and treasury activities.

Recent Tax Alerts

Internal Revenue Service

— May 25: IRS officials highlight latest transfer pricing developments (Tax Alert 2023-0951)


— Jun 01: Brazil adopts new rule on individual taxation of financial investments, controlled entities and trusts held abroad (Tax Alert 2023-0982)

— Jun 01: Denmark expands tax liability scope to include activities carried out in the Exclusive Economic Zone (Tax Alert 2023-0980)

— Jun 01: Dominican Republic Executive Branch enacts law implementing mandatory electronic invoicing (Tax Alert 2023-0976)

— Jun 01: EY Canada's Tax Matters @ EY for June 2023 (Tax Alert 2023-0975)

— Jun 01: UK announces changes to the Youth Mobility Scheme (Tax Alert 2023-0974)

— May 31: The Netherlands issues proposed Pillar Two legislation (Tax Alert 2023-0972)

— May 31: UAE issues update to the mandatory unemployment insurance program (Tax Alert 2023-0971)

— May 31: UK/Australia and New Zealand Free Trade Agreements enter into force (Tax Alert 2023-0970)

— May 31: Canada | Prince Edward Island budget 2023-24 (Tax Alert 2023-0969)

— May 31: Saudi Arabia clarifies interpretation of service-PE provisions in its tax treaties (Tax Alert 2023-0967)

— May 31: Turkey extends the deadline for tax amnesty application (Tax Alert 2023-0966)

— May 30: Saudi Arabia announces fifth wave of Phase 2 e-invoicing integration (Tax Alert 2023-0959)

— May 30: Costa Rican Executive Branch files comprehensive tax reform bills (Tax Alert 2023-0957)

— May 30: Chile | New mining royalty is approved and ready to become law (Tax Alert 2023-0956)

— May 25: Nigeria | Highlights of the Business Facilitation (Miscellaneous Provisions) Act (Tax Alert 2023-0950)

— May 25: Switzerland opens public consultation on procedural aspects of the OECD's Pillar Two minimum corporate tax (Tax Alert 2023-0949)

— May 25: United States | IRS GLAM concludes that the regularly-traded-stock-exception test under IRC Section 897(c)(3) applies at partnership level (Tax Alert 2023-0947)

— May 25: Puerto Rico's Treasury Secretary announces sales and use tax holiday for hurricane-season purchases will take place from May 26-May 28, 2023 (Tax Alert 2023-0946)

— May 25: Australian Taxation Office issues second draft of compliance guidelines on intangibles arrangements (Tax Alert 2023-0942)

— May 25: New Zealand to adopt the OECD GloBE (Pillar Two) rules (Tax Alert 2023-0941)


— Jun 01: House passes Fiscal Responsibility Act, 314-117 (Tax Alert 2023-0979)

— May 31: What to expect in Washington (May 31) (Tax Alert 2023-0963)

— May 25: Ways & Means Republicans introduce tax increase on foreign companies to "combat" global tax deal (Tax Alert 2023-0948)


— Jun 01: Indiana law lowers personal income tax rates gradually starting in 2024; exemption for dependent children is modified retroactive to January 1, 2023 (Tax Alert 2023-0981)

— May 31: Bloomington, Minnesota requires earned sick and safe leave effective July 1, 2023 (Tax Alert 2023-0968)

— May 30: Minnesota enacts new retail delivery fee set to take effect in July 2024 (Tax Alert 2023-0962)

— May 30: Minnesota omnibus tax legislation includes increased taxes on corporations and individuals (Tax Alert 2023-0961)

— May 30: Payroll Month in Review | May 2023 (Tax Alert 2023-0960)

IRS Weekly Wrap-Up

Proposed Regulations

 REG-110412-23Additional Guidance on Low-Income Communities Bonus Credit Program


 2023-43Guidance on Section 305 of the Secure 2.0 Act of 2022 with respect to expansion of the Employee Plans Compliance Resolution System
 2023-44Additional guidance for the Qualifying Advanced Energy Project Credit Allocation Program under Section 48c(e)

Internal Revenue Bulletin

 2023-22Internal Revenue Bulletin of May 30, 2023

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.