Route To: Partners Managers Staff File LIST OF SUBSTANTIVE CHANGES AND ADDITIONS PPC S TAX ELECTIONS DESKBOOK Twenty-fourth Edition (October 2018) Highlights of this Edition The following are some of the important new features of the 2018 Edition of PPC s Tax Elections Deskbook: Updated Elections. Numerous elections throughout the Deskbook have been updated for judicial decisions, Treasury and IRS guidance, and 2018 rates and TCJA Changes. Numerous elections throughout the Deskbook have been updated for changes made in the Tax Cuts and Jobs Act (TCJA). Qualified Equity Grants Election. A new election has been added to the Deskbook for electing to defer income from qualified equity grants under IRC Sec. 83(i). In addition to these featured items, your Deskbook includes the following update items detailed below. CHAPTER 2 1. The election to designate alimony as nondeductible 2D Individuals has been updated for the Tax Cuts and Jobs Act (TCJA) change that alimony will no longer be deductible by the payor spouse nor included in the income of the recipient spouse for divorce or separation agreements executed after December 31, 2018. 2. A new election has been added for electing to defer 2J income from qualified equity grants under IRC Sec. 83(i). 3. The election to exclude interest from U.S savings 2O bonds used for educational expenses has been updated for 2018 4. The election to claim credits based on dependent 2P status in a multiple support agreement situation has been updated for changes made by the TCJA. 5. The election to claim a child as a dependent child of 2Q divorced or separated parents has been updated for changes made by the TJCA. 6. The election to claim foreign income taxes as a 2Y credit or a deduction under IRC Sec. 901 has been updated for changes made by the TCJA. 7. The election to exclude foreign earned income and housing costs has been updated for 2018 2Z ftep18sub -1-
CHAPTER 3 1. The election to be treated as an electing investment 3F Partnerships and Partners partnership under IRC Sec. 743(e) has been updated for changes made by the Tax Cuts and Jobs Act (TCJA) regarding what is considered a substantial built-in loss. 2. Added an alert that the TEFRA consolidated audit 3J rules for small partnerships were repealed for partnership tax returns filed for tax years beginning after 2017. 3. The election for electing out of the centralized 3L partnership audit regime for small partnerships has been updated to included new guidance. 4. The push-out election under the centralized 3M partnership audit rules has been updated to include new guidance. 5. The election to apply the centralized partnership audit rules before 2018 has been updated for finalized regulations. 3N CHAPTER 4 S Corporations and Shareholders CHAPTER 5 Corporations and Shareholders CHAPTER 7 Trusts and Estates (Income Taxation) CHAPTER 8 Tax-exempt Entities 1. The election that permits an electing small business trust to be treated as a permitted shareholder has been updated with TCJA changes regarding nonresident aliens. 2. The election to convert a qualified Subchapter S trust (QSST) to an electing small business trust (ESBT) has been updated with TCJA changes regarding nonresident aliens. 3. That election to convert an ESBT to a QSST has been updated with TCJA changes regarding nonresident aliens. 4. The election to treat distributions by an S corporation as dividends during the post-termination transition period has been updated with TCJA changes for an eligible terminated S corporation that has an accumulated adjustment account on the last day of the post-termination transition period. 1. The transferor s and transferee s disclosure statement in a tax-free incorporation under IRC Sec. 351 has been updated with additional information required in the disclosure statement. 1. The election for special income tax treatment for qualified funeral trusts has been updated with a clarification of the requirement for filing as a qualified funeral trust (by the trustee versus the individual grantors). 1. The election to pay the proxy tax instead of reporting lobbying expenditures has been updated for the 2018 tax rate. 4D 4E 4G 4X 5G 7I 8H -2-
CHAPTER 9 1. The election to rollover a qualified plan or IRA 9C Retirement Plans and distribution has been updated by TCJA changes and Distributions various disaster relief bills. 2. The election to make a nondeductible IRA contribution has been updated for 2018 9J 3. The election to contribute to a SIMPLE IRA plan has been updated for 2018 9K 4. The election for a SIMPLE IRA plan sponsor to make nonelective contributions has been updated for 9M 2018. CHAPTER 10 Self-employment and Payroll Taxes CHAPTER 11 Estate, Gift, and Generation-skipping Transfer Taxes 1. The election to use the nonfarm option to increase self-employment income has been updated for 2018 2. The election to use the farm option to increase selfemployment income has been updated for 2018 1. The election to deduct medical expenses on a decedent s income tax return was updated for TCJA changes. 2. The election to spread a gift to a qualified tuition program in excess of the annual exclusion over a five-year period has been updated for 2018 3. The election to transfer the deceased spousal unused exclusion (DSUE) amount (portability election) has been updated for 2018 4. The election for spouses to split gifts has been updated for 2018 10A 10B 11A 11B 11D 11M CHAPTER 12 Tax Accounting Periods and Methods 5. The election to defer the payment of estate tax attributable to a closely held business has been updated for 2018 1. The election for bond premium amortization has been updated for Rev. Proc. 2018-31. 2. The election under the uniform capitalization (UNICAP) rules to use the simplified service cost method has been updated for Rev. Procs. 2018-31 and 2018-40. 3. The election under the UNICAP rules to use the simplified production method has been updated for Rev. Procs. 2018-31 and 2018-40. 4. The election to adopt the service warranty income method for prepaid service contracts has been updated for Rev. Proc. 2018-31. 5. The election to request a change in accounting method has been updated for Rev. Proc. 2018-31. 6. The election to change a method of accounting for estimating inventory shrinkage has been updated for Rev. Proc. 2018-31. 7. The election to adopt the LIFO inventory method has been updated for Rev. Proc. 2018-31. 11AA 12B 12C 12D 12M 12N 12V 12W ftep18sub -3-
8. The election to revoke the LIFO inventory method has been updated for Rev. Proc. 2018-31. 12X 9. The election and sample statement to mark-tomarket for dealers in commodities has been updated 12AA for Rev. Proc. 2018-31. 10. The election and sample statement to mark-tomarket for traders in securities or commodities has 12AB been updated for Rev. Proc. 2018-31. 11. The election for reporting OID using the cash method has been update for 2018 12AD CHAPTER 13 1. The election to value employer-provided autos under 13A Income Items and Exclusions a special valuation method has been updated for 2018 2. The election to defer reporting of advance payments for services has been updated for Rev. Proc. 2018-13F 31. 3. The election to revoke the income accrual election on U.S. savings bonds has been updated for Rev. 13H Proc. 2018-31. 4. The election to defer prepaid subscription income has been updated for Rev. Proc. 2018-31. 13J CHAPTER 15 Deductions and Losses CHAPTER 16 Depreciation and Amortization 5. The election for including accrued bond market discount in current income has been updated for Rev. Proc. 2018-31. 1. A new election has been added for electing to forgo the NOL carryback period for farming losses. 2. The election to use the standard mileage rate instead of actual expenses has been updated for 2018 1. The election to adopt the alternative depreciation system (ADS) for regular tax has been updated with a law change alert regarding the fact that corporations are no longer subject to AMT and as a result will no longer be required to prepare separate AMT depreciation calculations. 2. The election not to apply regulations for MACRS property involved in a like-kind exchange has been updated for changes made by the TCJA which limit such transactions to qualified real property. 3. The election to elect out of bonus depreciation has been updated for changes made by the TCJA. 4. The election to capitalize and amortize research and experimental expenses has been updated with TCJA changes that require research and development expenditures to be capitalized and amortized over five years for amounts paid or incurred in tax years beginning after 2021. 13Q 15F 15L 16G 16I 16J 16L -4-
5. The election to expense depreciation assets under 16M IRC Sec. 179 has been updated for changes in the limitation CHAPTER 19 Credits 1. The election to treat combat pay as earned income for the earned income credit has been updated for 2018 19C ftep18sub -5-