IRS Associate Chief Counsel Advice

IRS: Carbon Offset Credits Must Be Included in Gross Income

The IRS Associate Chief Counsel issued guidance clarifying that operators of offset projects must include the value of carbon offset credits granted by the California Air Resources Board (CARB) in their gross income. This advice addresses the tax treatment of credits issued under California's Cap-and-Trade Program.

IRS Memo on Source of Gain from Stock Dispositions

The IRS issued Associate Chief Counsel Advice AM2024-005 clarifying the source of gain from certain stock dispositions for U.S. citizens who become bona fide residents of Puerto Rico. The memo addresses situations involving S corporations and partnerships, providing specific conclusions on whether such gains are considered derived from Puerto Rico sources for tax exclusion purposes.

IRS Memo on Periodic Adjustments and Arm's Length Standard

The IRS issued Associate Chief Counsel Advice Memorandum AM2025-001 to clarify guidance on periodic adjustments and the arm's length standard under Section 482. This memo updates prior advice and addresses how taxpayers can overcome periodic adjustments by invoking the general arm's length standard or best method rule.

IRS Advice on Treaties for Branch Profits Tax on Hybrid Entities

The IRS has issued Associate Chief Counsel Advice (AM 2025-002) regarding the application of U.S. income tax treaties to the branch profits tax for hybrid entities. The advice clarifies the extent of treaty relief available for foreign entities that are fiscally transparent in their home country but treated as corporations for U.S. tax purposes, specifically addressing scenarios involving U.S. permanent establishments and U.S.-Country Y tax treaties.

IRS Guidance on Section 4960 Excise Tax Refund Claims

The IRS issued a Generic Legal Advice Memorandum (GLAM) clarifying that remuneration paid by a tax-exempt organization (ATEO) to a covered employee is subject to the Section 4960 excise tax on excess remuneration, even if the organization is part of an affiliated group with a covered health insurance provider. The GLAM states that reliance on prior reasoning that would exempt such remuneration is not a reasonable interpretation of the statute.