The United States is currently in the middle of the most hyper-partisan political atmosphere in generations.  Bipartisan solutions to problems have become nearly impossible, as each side refuses to agree to a solution that might place the other side in a positive light.  Against that background, Congress enacted a comprehensive tax reform package less than two weeks before the end of 2017.  This tax reform legislation has become the single biggest item of focus in the U.S. tax practitioner world.

Public Law No. 115-97 (the “Act”) was signed into law by President Donald Trump on December 22, 2017.  The Act was signed just 51 days after it was introduced by the House of Representatives on November 2, 2017.  Unsurprisingly, the Act is entirely partisan, having received support only from Republican members of Congress.  As a measure of just how partisan the Act is, the Act, which was originally named the “Tax Cuts and Jobs Act” (and still is popularly referred to as such), was forced to abandon that short title due entirely to partisan politics.

As described in more detail below, the Act adds, eliminates, or modifies various sections of the Internal Revenue Code of 1986, as amended (the “Code”).  The Act represents the most substantial and far-reaching revisions to the Code since 1986.  However, unlike the 1986 revisions, which were generally done in a deliberative manner to bring to fruition overriding theories of tax policy, the Act was a rushed piece of legislation affecting a hodge-podge of different Code sections with little overriding theory.  In certain cases, the revisions seem to represent contradictory policy decisions.

Both sides of the political divide continue to argue about the effect that tax reform will have on the U.S. economy.  The effect of the tax reform legislation on the federal budget deficit is also a matter of dispute.  The non-partisan Joint Committee on Taxation estimates that the Act will increase the gross domestic product, resulting in significantly increased tax revenues despite the reduction in tax rates.  Others, however, are sceptical that reality will match this prediction, arguing that without significant reductions in expenditures, a reduction in tax rates will simply result in an increase in the federal deficit.

While the complex interaction of many of the changes makes it difficult to determine the exact effect of the tax reform legislation on any specific taxpayer, it generally appears that most taxpayers will see a reduction in tax liability.  Interestingly, one class of taxpayers that will likely see an increase in tax liability is upper-middle class and high-net-worth individuals living in states with high state income tax rates (e.g., New York, Massachusetts, New Jersey, and California).  This is due to a new $10,000 cap on deductions for individual state income tax payments.

2 Domestic tax reform

Numerous corporate and business provisions of the Code have been created or amended by the Act.  Some of these provisions relate specifically to lowering tax rates and, in certain cases, targeting such lowered tax rates to specific types of structures and industries.  Other provisions are a somewhat random assortment of amendments to various Code sections, creating some winners and some losers, often appearing to be due to nothing more than who had the loudest voice at the table.

3 Reforms relating to tax rates and business structure

The provisions that likely may have the largest effect on the domestic business atmosphere in the United States are those affecting the corporate and individual tax rates on business income.

Tax rates and AMT

Perhaps the most significant changes made by the Act were reductions in the tax rates.  The corporate tax rate, which previously had been among the highest in the world at 35%, was permanently reduced to 21%.¹  In addition, the corporate alternative minimum tax (the “AMT”), which had long been criticised as complicated and unnecessary, has been repealed.²

For individuals (including individuals who operate businesses through a partnership, limited liability company, or subchapter S corporation), the reduction in tax rates was more modest, with the highest marginal tax rate reduced to 37% (from the previous highest marginal tax rate of 39.6%).³  The brackets of income for which each level of tax rate is imposed was also increased, allowing for more income to be taxed at lower rates.⁴

Prior to the passing of the Act, it had been hoped that the individual AMT would be repealed entirely.  The individual AMT was originally passed in 1969 to ensure that wealthy taxpayers wouldn’t be able to avoid paying income taxes through creative use of deductions.⁵  However, in the subsequent years, most of those strategies were eliminated.  At the same time, more and more middle class taxpayers became subject to the labyrinthine AMT rules.

Unfortunately, the Act did not repeal the individual AMT entirely.  However, it did significantly increase the amounts of income exempt from the AMT and, because such amounts have been indexed to inflation, it is hoped that these changes to the individual AMT will prevent the creeping snare of the AMT onto middle class taxpayers.⁶

Unlike the changes to the corporate tax rates and AMT, which are permanent, the reductions to the individual tax rates and changes to the individual AMT are scheduled to expire starting in 2026.⁷  Many commentators have noted that this was a particularly shrewd move by the Republican legislators responsible for passing the Act.⁸  Because the Act had no support from the Democrats and only a slim majority in the Senate, it had to be passed using a special parliamentary process that is limited by a rule that prevents legislation from being passed if it would significantly increase the federal deficit beyond the 10-year budget window.  The only way that Congress could comply with the rule was by making some of the provisions expire before the end of that 10-year budget window.  Republicans chose the individual tax provisions to be those that sunset, based on an assumption that even if the Democrats control Congress at the time such provisions are scheduled to expire, they will pass legislation at such time to allow them to continue rather than face the political backlash of allowing such lower tax rates to expire.⁹

Pass-Through Deduction

While individual tax rates weren’t reduced as much as corporate tax rates, individuals are able to benefit from a new deduction (the “Pass-Through Deduction”) for “qualified business income” recognised from a partnership, S Corporation, or sole proprietorship.¹⁰  This deduction is generally equal to 20% of such taxpayer’s qualified business income,¹¹ effectively reducing the highest tax rate on such income to 29.6%.  However, the amount of the deduction is generally limited to the greater of (i) 50% of the compensation paid by the business to employees, or (ii) the sum of 25% of compensation paid to employees plus 2.5% of unadjusted taxable basis of the tangible depreciable property held by the business and used in the production of qualified business income.¹²  A “qualified business” generally means an active trade or business carried on by the taxpayer through a sole proprietorship or pass-through entity, but does not include specified service trades or businesses in certain fields such as health, law, accounting, and other services where the principal asset of the trade or business is the reputation or skill of one or more of its employees or owners.¹³

Taxpayers with taxable income below a certain threshold are not subject to either the limitations based on employment compensation and depreciable tangible property or the prohibition on specified services.¹⁴  In addition, dividends received from a real estate investment trust (a “REIT”) are generally eligible for the 20% deduction without being subject to the limitations based on employment compensation and depreciable tangible property.¹⁵

While this new deduction has been well-received by the business and tax practitioner communities, many questions remain relating to this new deduction, including:

• How active does the business need to be in order to be eligible for the deduction?  Is a single triple-net lease real estate property sufficient?  What about a portfolio of several such properties?
• How does one determine the deduction when a single entity has more than one trade or business?  Are the limitations applied to each trade or business separately?  What if one trade or business is a specified service business – are the other trades or business tainted by the specified service business?  What if a taxpayer engages in a single trade or business through several entities?
• How does one determine whether the reputation or skill of one or more of the employees or owners is the primary asset?  Does the greatest bicycle repairman in the neighbourhood lose the deduction because he or she is not merely mediocre?

In order to prevent abuse of this new deduction, the Act provided for a reduced threshold for imposing penalties for improperly claiming the deduction.¹⁶  Therefore, without sufficiently clear answers to these (and many other) questions, many taxpayers will likely be nervous to claim the deduction in cases where there is any doubt regarding their eligibility.  Practitioners are therefore hoping to get some clarity regarding these questions sooner rather than later.

Like the other individual tax reform provisions, the Pass-Through Deduction is also scheduled to expire for tax years starting in January 1, 2026.¹⁷

Effect of tax reform on choice of entity and structuring decisions

The new tax rates and Pass-Through Deductions have provided taxpayers with new structuring opportunities, and are causing many taxpayers to revisit their current structures.  For instance, many taxpayers that had previously been structured as either partnerships or S corporations are now considering whether the substantial reduction in corporate tax rates makes it more profitable to be structured as a C corporation.  Particularly for a business that (1) is not eligible for the Pass-Through Deduction, and (2) typically retains earnings rather than distributing them, the 21% corporate tax rate (plus a second level of individual tax at some distant time in the future) may be more attractive than a 37% individual rate on such income currently.

The intricacies of the Pass-Through Deduction also create many other structuring opportunities.  Many real estate companies (especially companies with large portfolios of mortgages) are organising, or reorganising, to be structured as REITs in order to ensure that distributions they pay will be eligible for the full 20% deduction without being subject to the limitations based on employment compensation and tangible depreciable properties.  Companies with several distinct trades or businesses are considering whether to separate them to avoid tainting a qualified business with a non-qualified one, while others are considering combining entities in order to have sufficient employment compensation or tangible depreciable property associated with a qualified business.  Some are also considering reclassifying senior management employees as partners, in order to allow them to receive the benefit of the Pass-Through Deduction.

While taxpayers are analysing whether any such restructuring makes sense, many are hesitant to make significant changes, especially changes that would be hard to undo without triggering tax.  One of the primary concerns is the risk that, if the Democrats win a majority of Congress and the presidency in 2020, they may pass legislation to take away many of these tax benefits.

4 Other domestic tax reform provisions

In addition to the provisions discussed above, the Act also included many other significant changes that affect the way businesses operate.

Business interest deduction

Under a new limitation added by the Act, taxpayers with average annual gross receipts in excess of $25 million, including corporate taxpayers, are subject to a new limitation on the deductibility of business interest.¹⁸  The new limitation is generally equal to 30% of adjustable taxable income.¹⁹  The new limitation generally does not apply to small businesses with average annual gross receipts that do not exceed $25,000,000.²⁰  This new limitation will likely have a significant effect on how businesses finance their operations, as the benefits to businesses of debt financing as compared to equity financing are now reduced.

This new limitation has an important exception for real estate businesses.  An “electing real property trade or business” may make an election to avoid the 30% limitation.²¹  An “electing real property trade or business” is any real property development, redevelopment, construction, reconstruction, acquisition, conversion, rental, operation, management, leasing, or brokerage trade or business that makes the election to avoid the 30% limitation.²²  However, the trade-off for making the election is that the electing real property trade or business is not eligible for the new bonus depreciation provisions (discussed below).

As with the Pass-Through Deduction, there are still numerous outstanding questions regarding the details of this limitation, including how to determine whether a taxpayer is in a real property trade or business in the case of partnerships and multiple tiers of entities.  It is anticipated that regulatory guidance will be issued by the end of 2018.

Like-kind exchanges

Under prior law, businesses and investors could dispose of business use or investment property without recognising gain if such property was exchanged for other “like-kind” property.  Such “like-kind exchanges” under Code section 1031 could be achieved either through a simultaneous exchange, or in a structured transaction that was concluded within six months.  Many businesses used this non-recognition provision in order to upgrade older machinery and other property without triggering taxable gain.

Under the Act, such like-kind exchanges are generally no longer eligible for non-recognition treatment.  However, in another giveaway to the real estate industry, like-kind exchanges of real property still qualify for non-recognition treatment.²³

Bonus Depreciation

Under prior law, a taxpayer was allowed, subject to certain phase-down rules, to take an additional 50% depreciation deduction for certain “qualified property” (“Bonus Depreciation”) in the year that the qualified property was placed in service. ²⁴

Under the Act, the Bonus Depreciation rate has been increased to 100% for qualified property that is placed in service after September 27, 2017 and before January 1, 2023.²⁵  The percentage is phased down to 80% for qualified property that is placed in service during 2023, 60% for qualified property that is placed in service during 2024, 40% for qualified property that is placed in service during 2025, and 20% for qualified property that is placed in service during 2026.²⁶  The Act also changed the definition of qualified property to permit taxpayers to take Bonus Depreciation on qualified property that is not new as long as the taxpayer has not itself used that property (i.e., the property has been used by other taxpayers, but not this taxpayer).²⁷  The increase in the Bonus Depreciation rate will almost certainly spur investment in new and used qualified property in the United States.

As mentioned above, real property trades or businesses that elect out of the new business interest deduction limitation will not be able to take advantage of the Bonus Deprecation rate increase.

Excess business loss limitation

Under the Act, “excess business losses” of a taxpayer other than a corporation are not allowed for the taxable year.²⁸  An excess business loss for the taxable year is the excess of aggregate deductions of the taxpayer attributable to trades or businesses of the taxpayer over the sum of aggregate gross income or gain of the taxpayer plus a threshold amount.²⁹  The threshold amount for 2018 is $500,000 for married filers who file a joint return, and $250,000 for other filers.³⁰  The threshold amount is indexed for inflation.³¹  In the case of a partnership or S corporation, the provision applies at the partner or shareholder level.³²  All disallowed losses are carried forward and treated as part of the taxpayer’s net operating loss (“NOL”) carryforward in subsequent taxable years.³³

Miscellaneous domestic tax reform items

The Act also contained the following new provisions:

• The rule providing for a “technical termination” of a partnership upon the transfer of 50% or more of the partnership interests over a 12-month period has been eliminated.³⁴  While the consequences of such a technical termination used to be substantial, changes instituted over a decade ago vastly reduced the significance of such a technical termination, though there were still compliance requirements.  By eliminating the rule entirely, the Act removes this trap for the unwary.
• Recipients of profits interests (so-called “carried interest”) in certain service-based partnerships are now subject to a three-year holding period (rather than a one-year holding period) in order to be eligible for long-term capital gains treatment.³⁵  Prior to the enactment of the Act, practitioners and relevant taxpayers had feared that the tax reform would eliminate capital gains treatment for carried interest entirely.  This new restriction is a welcome compromise.
• New limitations were imposed on deductions for excess executive compensation of publicly-traded companies (capped at $1 million, including for commissions or performance-based remuneration), ³⁶ net operating losses (now limited to 80% of taxable income),³⁷ and entertainment expenses (generally, no longer deductible).³⁸
• As a response to the “Me Too” sexual harassment movement, the Act created a new provision denying a deduction for any payments made pursuant to a settlement agreement relating to sexual harassment or sexual abuse if such payments are subject to a non-disclosure clause.³⁹

5 International tax reform

Some of the most significant and complex changes enacted by the Act were made to the cross-border U.S. tax regime, particularly to taxation of foreign-source income of U.S. persons.

The U.S. taxation regime has always taxed U.S. persons (both corporate and non-corporate) on their worldwide income.  While the Code generally provides for credits against U.S. income tax for foreign taxes paid on foreign-source income,⁴⁰ there are numerous limitations that could restrict the ability to use the full foreign tax credit.⁴¹  Further, to the extent the U.S. tax rate on such income is greater than the foreign tax rate, the U.S. taxpayer is liable for that difference.  (In the case of corporate taxpayers, this scenario will likely become less common due to the substantial reduction in the corporate tax rate.)  Undistributed income earned by foreign corporations has generally not been taxable to U.S. shareholders, unless such foreign corporations were “controlled foreign corporations” (generally, 50% or more owned by U.S. shareholders) and the income was of a specific character (generally, passive and other forms of so-called “subpart F” income).⁴²  Dividends received from such foreign corporations, however, were subject to full U.S. taxation.⁴³

The Act made numerous very significant changes to this regime.  The changes have been advertised as instituting a territorial taxation regime.  However, this is not entirely accurate, because, in the majority of situations, the changes enacted by the Act will have the result of significantly more foreign-source income being subject to U.S. taxation.  A more accurate way of describing the changes would be that, in accordance with President Trump’s call for “America first”, the Act has instituted incentives for repatriating foreign earnings into the United States so they can be invested into domestic capital and operations.

6 Territorial system

The new territorial system that has been enacted is a participation exemption regime, providing for a 100% dividends received deduction for the foreign-source portion of dividends received from a foreign corporation.⁴⁴  However, this deduction is only available to domestic C corporations who own at least 10% of the foreign corporation and have held, or will hold, such percentage of shares for a continuous one-year holding period.⁴⁵  Individuals who receive foreign-source dividends are still subject to full U.S. tax.  Corporations that operate in foreign jurisdictions in branch, rather than through corporate subsidiaries, also do not benefit from this new territorial system.

As part of the switch to the territorial system, the Act imposes a mandatory deemed repatriation tax on all accumulated post-1986 foreign earnings held by controlled foreign corporations (“CFCs”) and certain other foreign corporations with domestic corporate shareholders.⁴⁶  Specifically, the Act treats all deferred post-1986 foreign-source earnings of such corporations as of either November 2, 2017 or December 31, 2017 (whichever is greater) as subpart F income that must be recognised by its U.S. shareholders for the tax year beginning before January 1, 2018.⁴⁷  Such deemed repatriated income is subject to a lower tax rate:  15.5% for earnings held by the foreign corporation as cash or cash equivalents, and 8% on all other earnings.⁴⁸  Further, U.S. shareholders may elect to spread the tax liability over an eight-year period.⁴⁹

One notable mismatch in this new regime is that, while only corporate taxpayers benefit from the foreign-source dividends received deduction, all U.S. taxpayers who own at least 10% of a CFC are subject to the deemed repatriation tax.  Particularly hard-hit are U.S. citizens living abroad, many of whom operate businesses through corporations formed in their resident jurisdictions.  As CFCs that may have had little subpart F income prior to enactment of the Act, many of these corporations have significant post-1986 earnings which, while being fully subject to tax in their home jurisdictions, have never been subject to U.S. taxation.

7 Base erosion prevention

Unlike the deemed repatriation tax, which is a one-time tax, the changes made by the Act with respect to combating base erosion are permanent and, therefore, ultimately more significant.  These changes include (1) a new category of subpart F income for global intangible low-taxed income (“GILTI”), (2) a new base erosion and anti-abuse tax (“BEAT”), and (3) a new Code section that denies a deduction for any payments made to related parties pursuant to a hybrid transaction or to/by a hybrid entity.

GILTI inclusion

As described above, U.S. shareholders that earned income through foreign corporations are generally only subject to tax when the income is paid to the shareholder as a dividend.  The primary exception is U.S. shareholders that owned 10% or more of a CFC.  Those shareholders are subject to the subpart F rules, and are required to include their pro rata share of the CFC’s subpart F income irrespective of whether the shareholder received a dividend.  Under prior law, subpart F income generally only included certain specific types of income, such as interest, dividends, and other passive income.

The Act creates a new Code section pursuant to which each person who is a 10% U.S. shareholder of any CFC must include in gross income its GILTI for the tax year as additional subpart F income.⁵⁰  While the term “Global Intangible Low-Taxed Income” implies that the foreign income is directly related to intangible assets (such as patents and trademarks), the method prescribed for calculating the inclusion is much broader.  It uses a complicated formula that allows for a specific rate of return on certain tangible property of a company, and treats the remaining income of the company as GILTI.

There are numerous details relating to the calculation of the GILTI inclusion and the taxation of such amounts to 10% U.S. shareholders (including special deductions and rates of tax for 10% U.S. shareholders that are corporations).  But at a basic level, this new inclusion represents a fundamental change to the deferral regime for low-taxed income of CFCs operating in foreign jurisdictions that has been inherent in the Code since the beginning.  No longer is there a presumption that all such income will be deferred until repatriation.  Rather, all such income will be presumed to be includible except to the extent of the allowed return on specific tangible assets.  Depending on the types of business operations of the CFC, such amount might be very low, effectively eliminating all deferral.

The BEAT

One of the methods by which multinational companies had been shifting income away from the United States and thus avoiding tax in the United States was by making payments to foreign affiliates that triggered a deduction in the United States.  The Organization for Economic Cooperation and Development (“OECD”) has been working to design and cause countries to implement measures to combat base erosion strategies like this one.

The Act creates BEAT in an effort to stop companies from stripping earnings out of the United States.⁵¹  The BEAT applies to both U.S. corporations that seek to reduce their U.S. federal income tax liability by making deductible payments to foreign affiliates and foreign corporations that are engaged in a U.S. trade or business that seek to reduce the tax on their effectively connected income (“ECI”) by making deductible payments to foreign affiliates.  However, the BEAT only applies to corporations with average annual gross receipts of less than $500,000,000 and a “base erosion percentage” of at least 3%, and does not apply to RICs or REITs at all.⁵²  For foreign corporations that are engaged in a U.S. trade or business, “gross receipts” are only gross receipts that are taken into account in calculating ECI.⁵³  The average annual gross receipts threshold is a high one, so it will not apply to most companies.

The BEAT is a type of alternative minimum tax.  A company subject to the BEAT is required to pay tax equal to its “base erosion minimum tax amount”.⁵⁴  The “base erosion minimum tax amount” is the amount by which 10% of the company’s “modified taxable income” exceeds the company’s normal U.S. tax liability (reduced by certain credits).⁵⁵  “Modified taxable income” is essentially normal taxable income plus certain deductible payments to foreign affiliates.⁵⁶  In other words, if a company reduces its tax liability to an amount that is less than 10% of its “modified taxable income” (which is its taxable income without regards to base-eroding deductible payments to foreign affiliates), then it will need to pay an alternative minimum tax equal to the difference.

Hybrid transactions and entities

Another method by which multinational companies seek to avoid tax in the United States is by taking advantage of differences in the ways that countries classify business entities for tax purposes.  For instance, certain entities (“hybrid entities”) may be taxed as a corporation in a low-tax jurisdiction, thus subjecting it to tax in that jurisdiction, but may be treated as a pass-through entity in the United States, thus avoiding an entity level tax in the United States.  A similar mismatch in tax treatment also exists for certain payments made pursuant to certain transactions (“hybrid transactions”) that are treated differently in different countries.  For instance, a payment made by a U.S. entity may result in an interest deduction in the U.S., but that same payment may be treated as a dividend that is not subject to tax in the foreign recipient’s jurisdiction.  The Internal Revenue Service views these hybrid entities and transactions as abusive.

The Act creates a new Code section that denies a deduction for any “disqualified related party amount” that is paid or accrued pursuant to a hybrid transaction or by, or to, a hybrid entity.⁵⁷  A “disqualified related party amount” is any interest or royalty that is paid or accrued to a related party if either the amount isn’t included in the related party’s income in its country, or the related party receives a deduction for the amount in its country.⁵⁸  The term “related party” mirrors the definition in Code section 953(d)(3), which focuses on entities that control (more than 50% of vote or value) each other or are controlled by the same person or persons.⁵⁹  The new section includes definitions of both hybrid transactions and hybrid entities that focus on payments or entities that are treated differently in the United States and a foreign jurisdiction.⁶⁰

A common investment structure to which this new rule could be relevant is the “leveraged blocker” structure that is often used by foreign investors to invest in U.S. real estate.  This structure involves an investor capitalising a domestic entity treated as a C corporation for U.S. tax purposes with part equity and part debt.  The interest paid on the debt portion is generally deductible by the domestic corporation.  Under the new rule, this deduction would be denied in some situations, depending on the rules of the home jurisdiction of the recipient.  For instance, if the home jurisdiction treats the domestic corporation as a disregarded entity, the interest payments may not be treated as income in such jurisdiction.  Alternatively, the home jurisdiction may treat the debt as equity (such that the payments are treated as dividends) and allow the recipient a dividends received deduction.  Under this new provision, the domestic corporation would be denied a deduction for the interest payments in those situations.

Footnotes

1 Code section 11(b).

2 Code section 55(a) (applying the AMT to “a taxpayer other than a corporation”).

3 Code section 1(j).

4 Id.

5 Pub. L. No. 91-172, 83 Stat. 487 (December 30, 1969).

6 Code section 55(d)(4).

7 Id.

8 See, e.g., Scott A. Hodge, The Economics of Permanent Corporate Rate Cuts Must Outweigh the Optics of Sunsetting Individual Tax Cuts, The Tax Foundation, November 16, 2017, available at https://taxfoundation.org/permanent-corporate-rate-cut-temporary-individual-tax-cut/.

9 See, e.g., Brett Samuels, Mnuchin: ‘I don’t know’ if individual tax cuts will extend beyond 2025, The Hill, November 19, 2017, available at http://thehill.com/homenews/sunday-talk-shows/361091-mnuchin-i-dont-know-if-individual-tax-cuts-will-extend-beyond-2025.

10 Code section 199A.

11 Code section 199A(b)(1).

12 Code section 199A(b)(2).

13 Code sections 199A(d)(1)(A) & (2), 1202(e)(3)(A).

14 Code section 199A(b)(3) & (d)(3).

15 Code section 199A(a)(1)(A) & (b)(1)(B).

16 Code section 6662(d)(1)(C).

17 Code section 199A(i).

18 Code section 163(j).

19 Code section 163(j)(1).

20 Code sections 163(j)(3), 448(c).

21 Code section 163(j)(7)(A)(ii) & (B).

22 Id. & Code section 469(c)(7)(C).

23 Code Section 1031(a)(1) now says: “No gain or loss shall be recognized on the exchange of real property held for productive use in a trade or business or for investment if such real property is exchanged solely for real property of like kind which is to be held either for productive use in a trade or business or for investment.” (emphasis supplied).

24 Code section 168(k)(8).

25 Code section 168(k)(6)(A)(i).

26 Code section 168(k)(6)(A)(ii) through (v).

27 Code section 168(k)(2)(A)(ii) & (E)(ii).

28 Code section 461(l)(1).

29 Code section 461(l)(3).

30 Code section 461(l)(3)(A)(ii)(II).

31 Code section 461(l)(3)(B).

32 Code section 461(l)(4).

33 Code section 461(l)(2).

34 Previous Code section 708(b)(1)(B) has been eliminated and previous Code section 708(b)(1)(A) is now just Code section 708(b)(1).

35 Code section 1061(a)(2).

36 Code section 162(m).

37 Code section 172(a).

38 Code section 274(a)(1).

39 Code section 162(q)(1).

40 Code sections 901, 902.

41 Code section 904.

42 Code sections 951–965.

43 Treasury Regulations section 1.1-1(b).

44 Code section 245A(a).

45 Code section 245A(b)(1).

46 Code section 965.

47 Code section 965(a)

48 Code section 965(c).

49 Code section 965(h).

50 Code section 951A(a).

51 Code section 59A.

52 Code section 59A(e)(1).

53 Code section 59A(e)(2)(A).

54 Code section 59A(a).

55 Code section 59A(b)(1).

56 Code section 59A(c).

57 Code section 267A(a).

58 Code section 267A(b)(1).

59 Code sections 267A(b)(2), 954(d)(3).

60 Code section 267A(c) & (d).