Monte Jackel Quoted in Tax Notes on Treasury Department Report on Regulatory Burdens

Tax Notes has quoted Akin Gump senior counsel Monte Jackel in the article “Treasury Report Signals Significant Overhauls Coming to Regs,” regarding a final report on regulatory burdens released by the Department of the Treasury. The article reports that Treasury withdrew two sets of controversial proposed regulations and outlined future actions to be taken on several other significant regulations, including potentially revoking the documentation rules of the debt-equity regulations.

Targeted in the report, the article notes, are regulations on allocating liabilities for purposes of the disguised sale rules, which would have changed the tax treatment of forming many partnerships. The government is also reported to be considering whether regulations relating to disguised sales should be revoked and the prior regulations reinstated.

Jackel said he agrees with the decision to revoke the debt allocation rules that treat all debt as nonrecourse in applying the disguised sale rules, but added that it’s unclear what that means for taxpayers today. “These rules that treat all debt as nonrecourse are currently effective and will remain effective until the IRS takes official action on the recommendation in this report,” he said.

Another unresolved issue, Jackel said, is what happens to any taxpayers that have already been subjected to the rules, which have been in effect for transfers on or after January 3, 2017. The report, he added, also does not indicate whether any revocation will be retroactive to that date, although it is implied that it will be.