By: William L. Bricker, Linda Galler, and Juliya L. Ismailov

The Biden administration is scrambling to finish unfinished tax business – namely, to finalize previously proposed regulations and to propose several new regulations interpreting provisions of the Internal Revenue Code.
While President Trump will likely issue a regulatory freeze on proposed regulations (as has become a regular practice by incoming presidents), the proposals will, in the meantime, obtain some publicity. By contrast, the process for withdrawing or modifying regulations that have been finalized will be more challenging, though that is certainly possible.
Below is the list of final and proposed tax regulations issued during the last week:
Final Regulations:
Expatriate Gift and Bequest Tax
interpreting Section 2801 on covered gifts or bequests from individuals who gave up US citizenship or permanent residency after June 2008
defining the terms “covered expatriate,” “foreign trust,” and “domestic trust”
Anti-Abuse Disclosure Requirements for Partnership Basis-Shifting and Microcaptive “Transactions of Interest”
basis-shifting intra-partnership transactions causing a basis increase over $25 million for 2025 (and $10 million in future years)
actions by a captive insurance company (microcaptive) insuring against risks of a specific business and paying taxes on its investment income
advisers and participants must disclose these two categories of transactions, which are now “transactions of interest”
Multinational Company Deductions
limiting deductions by multinational companies when payments are made to a US corporation generating a loss in the US corporation’s global minimum tax calculations
interest and royalties to a US company from a disregarded entity are included in US company’s income
intended to prevent “double dipping” by deducting a loss in both a foreign country and on US tax return
Characterization of Digital Content Transactions and Cloud Computing Transactions
aiding in characterizing cloud transactions and digital content access as provision of services or a lease of property
adopting a “predominant character approach” in a mixed transaction, such as purchase of digital content played on a cloud platform (instead of bifurcating the transaction into different income types)
determining the source of income from cloud transactions
Access to IRS Independent Office of Appeals
addressing procedural and timing rules that must be met before IRS Appeals consideration of tax cases
providing exceptions to consideration by IRS Appeals of certain types of cases
Proposed Regulations:
Commercial Clean Vehicle Credit
credit available for businesses who place a qualified commercial clean vehicle in service after Dec. 31, 2022, including previously owned vehicles
credit available for manufacturers of qualified commercial clean vehicles
credit is the lesser of the incremental cost (i.e., purchase price of vehicle over purchase price of a comparable vehicle), and 15% of the taxpayer’s basis in the vehicle (30% for a vehicle not powered by gasoline or diesel engine)
Qualified Derivative Payments under Base Erosion Antiabuse Tax (BEAT)
modifying 2019 final regulations
disqualifying mark-to-market gain or loss on certain outbound derivative payments (QDPs) to foreign affiliates in related party securities lending transactions
Limits on Deduction of Over $1M of Salary by Publicly Held Corporations
clarifying determination of five highest-paid employees targeted by the deduction limitation
defining “employee” to include a common law employee, an officer of the corporation, and an employee of a subsidiary or affiliated holding company
Corporate Reorganizations
providing regulatory guidance on structuring and implementing tax-free corporate reorganizations or spinoffs.
requiring multi-year reporting for corporate separations and related transactions on new Form 7216
Regulations Implementing Changes Made by SECURE 2.0 Act
requiring that certain cash or deferred arrangements and salary reduction agreements with employees be eligible for automatic enrollment
retirement plan catch-up contributions made by higher-income participants are designated as after-tax Roth contributions
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