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Prop. regs. update valuation limit for employee use of vehicle

The IRS issued proposed regulations that update the fleetaverage and vehicle centspermile valuation rules described in Regs. Secs. 1.6121(d) and (e), respectively, to align the limitations on the maximum vehicle fair market values (FMVs) for use of these special valuation rules with recent statutory changes made to the depreciation limitations in Sec. 280F (REG10137819). Consistent with the substantial increase in the dollar limitations on depreciation deductions under Sec. 280F(a), the proposed regulations increase, effective for the 2018 calendar year, the maximum base FMV of a vehicle for use of the fleetaverage or vehicle centspermile valuation rule to $50,000. The proposed regulations provide that this $50,000 base value will be adjusted annually for inflation using Sec. 280F(d)(7) for 2019 and subsequent years. As noted in the proposed regulations’ preamble, Notice 201934 provides that the inflationadjusted amount for 2019 is $50,400.

Rules proposed for classifying cloud and digital content transactions

The IRS proposed regulations (REG13070014) to clarify how to classify transactions involving digital content and cloud computing. The new rules are designed to help taxpayers decide whether an electroniccommerce transaction is a sale, lease, license, or provision of services when applying various international provisions of the Code, such as sourcing rules and Subpart F. While existing regulations address how to classify transactions involving computer programs, none explicitly cover most transactions involving items such as movies in digital format or cloud computing. The proposed regulations would fill this gap.

Prop. Regs. Sec. 1.86119(d) provides numerous examples for determining whether a transaction is a lease or a provision of services, including rented capacity on remote servers, software development platforms and web hosting, downloaded software and software accessed through an application, streamed digital content using thirdparty servers, and access to online databases.

Nondiscrimination rules relief extended

In Notice 201949, the IRS issued guidance extending the temporary nondiscrimination relief for certain “closed” defined benefit pension plans provided in Notice 20145, making that relief available for plan years beginning before 2021 if the conditions of Notice 20145 are satisfied. This extension is provided in anticipation of final amendments to the Sec. 401(a)(4) regulations. 

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